01/29/2015 10:25AM

NTRA meets with Treasury over tax policy

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Officials with the National Thoroughbred Racing Association and several horseplayers met with an official in the Treasury Department this week in Washington to discuss the NTRA’s request for a change in how gambling winnings are taxed, the president of the NTRA said on Thursday.

Alex Waldrop, the president of the NTRA, said the official for Treasury was a “high-ranking individual … who has policy responsibility.” He declined to name the official but said the person was a horseplayer who understood the dynamics of wagering and how betting is affected by tax policies.

“The good news is that we now have an open dialogue with Treasury,” Waldrop said. “But we don’t have anything definitive yet.”

The meeting was put together by U.S. Rep. John Yarmuth, a Democrat who represents Louisville, Ky. An official with Churchill Downs Inc. also was at the meeting. Churchill operates three racetracks and the largest account-wagering company in the U.S.

Last year, the NTRA urged a number of legislators to send a letter to Treasury arguing that the current withholding policy on winnings is unfair. 
Under the policy, any winnings at greater than 300-1 generates a notification to the IRS, and any winnings of $5,000 or more at 300-1 odds or greater triggers automatic withholding, regardless of the amount the player bet.

The NTRA has argued that the notification and withholding should only be triggered if the payoff is 300-1 or greater based on the amount the player wagered in the pool. For example, if a player bets a $24 trifecta box and cashes the ticket, the notification and withholding would only be triggered if the payoff on the $1 winning combination was greater than $7,200.

“We were there simply to give Treasury real-life examples of the administrative burden and real impact of over-reporting and over-withholding on our industry, which is the result of our expanded wagering menu,” Waldrop said. 

The NTRA landed on the strategy of going directly to Treasury after finding little support from Congress for amending the tax laws concerning gambling winnings.

HatzOffToNixon More than 1 year ago
A civilized country would not be taxing these winnings at all. The pool is already taxed in a confiscatory manner. Maybe the only way to improve the outlook for racing is to abolish ALL tax on winnings.
HatzOffToNixon More than 1 year ago
How about
Vince Piscitelli More than 1 year ago
Here is another problem. I can already see someone complain that they wagered separate tickets in the same race totaling $40. Their TRI paid $8,000 BUT they played $40 in the same race and have proof so they should not be taxed because their odds won at 200-1, or below the threshold. I see huge problems. They better put this law in bold print and specifically say your wager MUST be on the SAME ticket. Vince P
Anonymous More than 1 year ago
Be careful what you wish for. When the law was written the minimum wager was $2 and therefore withholding did not kick in until the payoff was $602 or more. The withholding threshold was changed many years later to $5000. The notification still applies at 300/1 or more but because of a quirk in the system it does not apply until the payoff is $602 or more. The sleeping giant, the IRS, may be awakened to this quirk in the system during these discussions. As most exotic bettors know, betting the same combinations in $1 increments that pay up to $601.90 will not require notification even though the odds were 300/1 or more. In other words, a trifecta or any other exotic that pays $800 for a $2 ticket would require IRS notification, whereas 2 $1 tickets for $400 each would not.
Walter More than 1 year ago
Very shrewd observation.
Joseph Rotell More than 1 year ago
if they didn't know this before you wrote this article, they sure as hell know now.
William More than 1 year ago
Safe to say that Congress is pretty useless
Anonymous More than 1 year ago
The example is wrong. The payoff would have to be at least $7,224.
harpharper . More than 1 year ago
About time!!! Change this archaic rule!!!