Queen of Hearts jackpot is over $5M: How is this unregulated gam - Cleveland 19 News Cleveland, OH

Queen of Hearts jackpot is over $5M: How is this unregulated game legal?

(Source: WOIO) (Source: WOIO)

More than five million $1 tickets have been purchased for the Grayton Road Tavern Queen of Hearts drawing over the past couple of months and none of it has been regulated by anyone at the state or local level. That's because it doesn't have to be. It's completely legal. 

How is the Queen of Hearts Legal?

According to Dan Tierney, a spokesman for the Ohio Attorney General, many bars and restaurants in Ohio hold their own Queen of Hearts drawings. 

With $5 million at stake you might be surprised to hear that no one, not even the Ohio Lottery, tracks or regulates the drawings and there's a very specific reason. 

It comes down to how much of the money collected is given back to the eventual winner. 

"While each game’s status under law would be fact specific, the marketing promotions commonly known as “Queen of Hearts” games are often likely to be considered 'pools not conducted for profit,'" Tierney said. "Ohio law allows individuals and business to conduct monetary pools if 100 percent of the money collected is paid out to the winner."

In the case of the Grayton Road Tavern 90 percent of the pot is given to the winner. The other 10 percent is used to start the next pool. 

This would still fall under the realm of legal, because the bar does not take the 10 percent as profit. 

The Taxman Cometh

It would be a good problem to have. Someone will eventually hit for $5,100,000, or maybe even more and it will put shove them into a whole new tax bracket. 

According to the Ohio Department of Taxation spokesman Gary Gudmundson, there will be no money taken off the top for taxes like it would be if it was through the Ohio Lottery or one of the state's casinos. 

"This is not a casino setting, so those regulations don’t apply," he said.

Where it will hurt is when it comes time to do 2018 taxes. 

The money will instantly put the winner in the State of Ohio's highest tax bracket, which is anyone making $213,350 or more.

"Presuming the winning amount exceeds $213,350, the winner would pay Ohio’s highest tax rate of 4.997 percent," Gundmundson said. "Tax would actually equal $8,178 + 4.997 percent or every dollar over $213,350."

Doing the math on $5,000,000 the winner will owe the $8,178 in base tax plus an extra $239,188.90. 

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