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Committee hears bill to lower charitable gaming tax tiers so small organizations keep more funds
Summary
The House Finance and Tax Committee heard testimony on House Bill 1465, which would create a three-tier gaming tax structure aimed at lowering taxes for smaller charitable organizations so more proceeds remain in local communities; industry representatives supported the change while lawmakers pressed for clarity on reserves and fiscal impacts.
The House Finance and Tax Committee opened a hearing on House Bill 1465 on charitable gaming tax reductions. Representative Dorey Hough, sponsor of the bill, told the committee the measure would change current tax tiers so smaller charities retain a greater share of gaming proceeds and can spend more locally.
Hough outlined the proposal’s framework: raise the first tier to $150,000 taxed at 1 percent; set a second tier of $150,000–$250,000 with a $1,500 flat fee plus 6 percent on the amount over $150,000; and create a third tier for adjusted gross proceeds over $250,000 that applies a $7,500 fee for the first $250,000 and 12 percent on amounts above that. “This bill … allow[s] local charitable organizations the ability to give more back to their communities,” Hough said.
The sponsor and supporters emphasized local examples of funded projects: volunteer fire equipment, youth sports, scholarships, daycare and nursing-home upgrades. Hough and witnesses noted the existing North Dakota Century Code structure that defines adjusted gross proceeds and currently allocates gaming funds so charities may use up to 60 percent for operating costs, with the remaining 40 percent for charitable purposes.
Scott Meske, testifying for the North Dakota Gaming Alliance, urged the committee to issue a "do pass" on HB1465 and said the change would not expand gaming operations but would keep more dollars under local control. Meske offered specific examples of community investments made with gaming proceeds and repeated fiscal estimates used in testimony: about $53,000,000 in gaming tax collected for the 2023–25 biennium and roughly $182,000,000 distributed to communities in net proceeds.
Committee members pressed sponsors and industry witnesses on several points. Representative Olson asked how the state’s reduced gaming tax intake would translate into more charitable spending locally; Hough pointed to the existing 60/40 split and said a reduction in the state’s tax share would increase the dollars remaining with charities. Chairman Hedlund highlighted a committee concern about large reserve balances in some charities and asked why those funds are not being distributed; Meske said reserve decisions are business choices for individual charities and declined to speculate on their uses.
Witnesses and members also discussed competition for site rentals, differences between paper and electronic pull-tab systems, and how charities select games and negotiate with site owners and distributors. Meske said 16 distributors are operated by North Dakotans and that manufacturers are out of state, estimating six to eight manufacturers supply the distributors.
No witnesses registered opposition during the hearing. Chairman Hedlund closed the hearing on House Bill 1465 and the committee took a brief recess to conduct other business.
Next steps: the committee closed the hearing on HB1465; no committee vote on the bill was recorded in this session transcript.
