09/29/2003 11:00PM

At last, players have their say


NEW YORK - The final session of the National Thoroughbred Racing Association's annual Marketing Summit last week in Las Vegas may have been a watershed for horseplayers. There, in the full view and with the rapt attention of more than 150 racetrack officials from around the country, was the overdue sight of some serious racing customers outlining their concerns and suggestions about the game.

The occasion was a presentation by the NTRA Players' Panel, a group that has happily exceeded its original purpose. The panel was created almost a year ago in the wake of the Fix Six scandal as a somewhat cosmetic attempt to restore customer confidence in the wagering system. Once it was in place, however, Commissioner Tim Smith and the NTRA saw the value of having a standing group of serious customers continue to assemble public opinions and offer serious recommendations about other aspects of the game they fund.

Jim Quinn, a well-known handicapping author and fan-education pioneer, was a natural choice to lead the panel, and he assembled a group of respected full-time players representing both geographical diversity and expertise in different areas: Ponti Compagna, Paul Cornman, Dave Cuscuna, Andy Cylke, Cary Fotias, Dave Gutfreund, Mike Maloney, Barry Meadow, Jim Mineo, and Maury Wolff. Ken Kirchner, the NTRA's resident wagering guru, serves as the final member and the liaison to the home office.

The issues on which they are preparing position papers include pool integrity, taxation and withholding, customer service, rebates, and simulcast production.

Quinn, Gutfreund, and Maloney updated the summit attendees on their work to date, and while all made strong presentations, Maloney's was especially compelling. Many in the audience had probably never heard from someone who bets $10 million a year, as Maloney does from his personal suite at Keeneland. A soft-spoken family man from Kentucky who used to operate antique shops, Maloney attacks super-exotic bets at tracks across the country.

The scale of his action gives weight to his primary area of concern, one which affects bettors of every bankroll size: The unfair and regressive Internal Revenue Service policies regarding withholding taxes on gambling proceeds.

In the course of a typical year, Maloney said, he has approximately $500,000 withheld, which nearly drives him out of action in the latter part of the yearly cycle while he waits and waits for his tax refund. Just to stay in action, he ends up exhausting a line of credit against his home equity until the IRS check comes, paying interest and making his family uneasy in the interim.

This is not just a $10 million bettor's problem. Just as Maloney generates $10 million a year in handle off working capital of a few hundred thousand, plenty of horseplayers put $100,000 a year through the windows off a stake of just a few thousand. When the IRS holds onto $5,000 of their rightful proceeds on the absurd premise that they never lose and should pay a maximum tax on their few winning bets, they, too, have serious cash-flow problems. Many stop playing, either until the refund check comes or, perhaps, permanently. If this money were available to them, handle would increase significantly.

Historically, the industry has either dismissed or failed to grasp the importance of this situation and not made taxation reform a priority. That could be changing. The NTRA is now actively pursuing the issue, and Maloney's case is a perfect example on which to argue it. It's a lot easier to frame the issue with the example of a customer who has to mortgage his house every year just to keep playing the game.

Maloney's proposed solutions are eminently simple and reasonable: Increase the withholding threshold to $25,000, to recognize the proliferation of superfecta, pick four, and pick six payoffs in the $5,000-to-$25,000 range; consider the actual cost of part-wheel bets as the basis for the 300-1 odds trigger for taxation instead of pretending that a $500 investment represents a single $1 or $2 winning bet; and allow regular players to have their action tracked and pay estimated quarterly taxes on their true profits instead of on the entire proceeds from their occasional scores.

You could see from the nods in the audience that many of the assembled racing officials were really getting it for the first time, and realizing what this seemingly obscure issue could mean to their business. Listening to the customers can be a beautiful thing.