Posted: Nov. 2, 2018
The National Thoroughbred Racing Association has released statistics that show a $307 million reduction in pari-mutuel winnings reported to the Internal Revenue Service in the first year of modernized United States Department of Treasury regulations.
The NTRA, after years of lobbying, was able to get the Treasury Department to alter reporting parameters used for pari-mutuel tax purposes. The regulations took effect Sept.28, 2017.
Citing information provided by the California Horse Racing Information Management System, commonly called CHRIMS, the NTRA said the gross amount of winning wagers reported to the IRS from Oct. 1, 2017, to Sept. 30, 2018, was $66.8 million, down 82% from $374.5 million from Oct. 1, 2016, to Sept. 30, 2017. Federal taxes withheld from winning wagers dropped from $43.2 million to $7.8 million, according to the statistics.
Though based in California, CHRIMS conducts settlements and other services for many pari-mutuel operators and the country’s largest tote companies, AmTote and United Tote.
The actual number of IRS tickets flagged for W-2G reporting by the IRS declined almost 89%, from 235,100 tickets to 26,350 winning tickets. The NTRA said the impact of the new regulations was “equally positive for horseplayers, pari-mutuel operators and horsemen” regardless of racetrack market size.
“The drastic reduction in the number of winning tickets requiring reporting and withholding is consequential in several ways,” NTRA President and Chief Executive Officer Alex Waldrop said. “Under the old regulations, it was not uncommon for horseplayers to feel the thrill of ‘winning’ only to have their proceeds reported and/or withheld by the IRS. The old regulations were both unfair and a burden to all involved.”
The NTRA used Triple Crown host tracks as an example. It said the combined number of winning on-track tickets that required IRS reporting at Churchill Downs, Pimlico Race Course and Belmont Park this year dropped 96%, and the gross amount of winning wagers required to be reported fell 87%.
The NTRA said 0n-track at the 40-day Saratoga Race Course meet, the number of winning tickets flagged for processing by the IRS fell 96%, the gross amount of winnings required to be reported fell 94% and the amount of money withheld from winning bettors fell 91%.
“The new regulations have been enormously beneficial to every sector of our business,” Waldrop said. “They would never have transpired without the bipartisan support we received on Capitol Hill and the unwavering support of every segment of the horse racing industry, including thousands of customers who answered our call to action.”
Through the first nine months of 2018, total commingled wagering on U.S. races was up 3.95% from the same period in 2017, though early numbers suggest a decline in pari-mutuel handle in October. Year-to-date purses were up 3.1% for the same period year-over-year.