06/03/2014 10:39AM

NTRA pushing for change to IRS tax rules


Horse racing’s lobbying arm is once again pushing for federal tax relief for horseplayers, this time in an effort to get the Department of the Treasury to issue a ruling on whether bettors can use the total cost of a wager to determine tax liability.

The National Thoroughbred Racing Association, which conducts racing’s federal lobbying efforts, has recruited more than a dozen congressional representatives to sign off on a letter to Treasury asking for a “clarification” of the current tax rule, which uses the denomination of a wager to determine tax liability. The NTRA is seeking an opinion that would allow players to use the total cost of the wager instead, which could provide substantial tax relief to many exotic-wager bettors and players who focus on multirace bets.

“Under an archaic IRS ruling currently in place, players’ winnings are being erroneously reported or withheld without regard for how much they actually wagered,” NTRA president Alex Waldrop said in a release. “If granted, this clarification will allow horseplayers to keep more of their winnings, reduce the administrative burden on tracks and [account-wagering companies], and ultimately generate more revenue for tracks, horsemen, and government.”

Federal tax policy on gambling winnings has been a source of frustration for many horseplayers for decades, and it’s becoming more widely irritating because of the rise of exotic wagering and multirace bets like the pick four and pick five, which can often have payouts that exceed the 300-1 federal tax limit even though the payoff is only four or five times the cost of the player’s total bet.

The letter sent by the NTRA to Treasury was co-authored by U.S. Reps. Charles Boustany (R.-La.) and John Yarmuth (D.-Ky.). Both are members of the House Ways and Means Committee, which has oversight over IRS rules.

The NTRA also said it has posted a petition on change.org calling for the clarification and will begin soliciting signatures from its contact lists and on horse-racing forums.

The NTRA and other horse-racing lobbyists have pressed in the past for tax policy to be changed through legislation, but those efforts have perennially failed, in part because of resistance by many lawmakers to be associated with a measure that, in the fewest words possible, is referred to as a “tax break for horse gamblers.”

The letter sent to Treasury states that the current tax policy was set in 1978, at a time that “pre-dates the expansion of simulcasting and exotic wagering.” Under that ruling, the IRS said that even though a $1 exacta box of three horses costs $6, the cost of the bet should be treated as $1. The NTRA called that ruling “in conflict with Treasury regulations stating that wagers in the same pool shall be treated as one bet.”

In regards to the 1978 ruling, the letter states that it “appears to ignore the fact that even though the $6 box ticket represented the placing of a $1 bet on each of six different combinations, all of those wagered amounts were part of a single pari-mutuel pool.”

CascadeCin More than 1 year ago
Wait till players get hit with the Obamacare penalty figured on MAGI, income before deducting any losses. One % could turn into 5-10% of income. That should be top priority for NTRA as more people will have to drop out.
Michael Griffiths More than 1 year ago
Take the taxes "upfront" say 5% of the betting pool, and make winning "tax free"
Benny B More than 1 year ago
I know lots of guys that play off shore. It's bad for everybody here in the states but our government is so short sighted. Perhaps it's because politicians are blind ( and deaf and dumb).
606 More than 1 year ago
They should be working on getting the rules for horse racing in line with sports betting and casino games. Last trip to Vegas I cashed for about $8,000 playing about $500 worth of $20-$40 basketball parlays. I paid no taxes, filled out no paperwork. But when I hit a tri for $800 playing a $72 ($1) ticket I had to fill out the form and will have to declare it as income. Eliminating this nonsense should have been lobbying task #1 for the NTRA the day they were formed but they have done nothing...a miserable failure.
Ian GW More than 1 year ago
I work as a proud public servant and a fan of the game. So I'm on both sides of this. I feel there is a plenty we can do to improve the system. I would say 90 percent of horse players wash out the winnings and rightfully so. Not many win at this game. The only issue is you must itemize the deduction. Keep you records for the year. I'm trying to one day move into a position where I could be of help for both or at least help with those who may not understand the game. I have so many great ideas that would be a win win for both.
Russ Jenkins More than 1 year ago
Canada has it right then......
Russ Jenkins More than 1 year ago
Oops...replied in the wrong spot. The problem with considering horse racing winning as 'earnings' the way i see it is: the track has already taken their 18-28 or whatever it is percent. Taxing people who actually 'win' after that is just totally unfair.......and like i said before, regardless of whether you get your losses to 'wash' your winnings, you'll still end up paying. Just a totally unfair system.
Anonymous More than 1 year ago
The track takeout is for the track, the horsemen (pays purses), and the state. Uncle Sam doesn't get part of the takeout ... unless you figure the profit the track or horseman realize down the line. I can't believe I am saying this, but maybe raise the takeout a smig and pay the Feds directly off the top ... cut down on the paperwork and auditing all around. Then, they have an incentive to help the game ... higher pools, bigger bucks for them!
Walter More than 1 year ago
Yes, Uncle Sam does get a cut from takeout. Raise takeout? Maybe instead of anonymous, you can name yourself track owner
martymar . More than 1 year ago
it doesn't apply in Canada, your winnings aren't consider earnings.
Thomas Reynolds More than 1 year ago
great idea... need to push this through asap... never made sense to pay on a $1 super that cost $75...
Walter More than 1 year ago
The tracks actually do us a favor by allowing .10 supers, you gotta play it for .10 and just hit repeat nine more times
Slew32A More than 1 year ago
Wrong!...If you did that on a nyra card they would add up to total times hit and put together and you would be taxed.
Sal Carcia More than 1 year ago
Don't forget to sign the petition linked here.
Allen Payne More than 1 year ago
return to pre-1978 rules ...big $ bettors can spread / break-up a 20,000 bet on a even money horse ..cash for 20 G profit ...NO TAX ...I hit an exacta for 625 bucks and I pay tax on it ..WTF ? abolish it all together , thats fair to all...they can work out a formula for lrg.P6, thats fair ..this current IRS crapola is bad for all,,,,,,,,,,
John More than 1 year ago
Makes sense, I usually play between a $54-$108 PICK 4, why should I pay the same taxes as a guy who hits with a $.50 or $1.00 ticket ?..........................they get us coming and going!