08/06/2014 12:09PM

Treasury Department to consider altering tax rule on winnings

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The U.S. Treasury Department has told Congress that it will review a proposed reinterpretation of a tax rule that would be favorable to horseplayers, the National Thoroughbred Racing Association, which conducts federal lobbying efforts on behalf of the racing industry, said Wednesday.

The NTRA said the Treasury Department acknowledged in a response to congressional representatives that it “will take the recommendations under consideration.” The representatives, including the highest-ranking members of the House Ways and Means Committee, signed on to a letter that asked Treasury to consider allowing horseplayers to use the total cost of a bet, rather than the denomination of the wager, in the calculation to determine tax liability for large winning payoffs, a reinterpretation that could save horseplayers millions of dollars annually in taxes.

According to racing officials, the Treasury Department had the option of refusing to consider the recommendation. Although the department is not guaranteed to issue an opinion favorable to the racing industry, one official characterized the Treasury acknowledgement “as a good first step.”

Horseplayers have long complained about the current rule, which requires horseplayers to pay taxes on bets that pay off at greater than 300-1 odds, based on the denomination of the bet. Horseplayers and racing-industry advocates have argued that the total cost of the bet should be considered when determining the tax liability, especially in an era when most everyday players target multileg bets like the pick four, pick five, and pick six, using tickets that frequently cost hundreds to thousands of dollars.

Approximately 7,500 people signed an online petition urging Treasury to reinterpret the rule. The NTRA and Daily Racing Form both sent out notices alerting horseplayers to the petition and asking other horseplayers to publicize the petition.