When it comes to making industry favorable changes on tax withholding and reporting of pari-mutuel winnings a reality this year, the National Thoroughbred Racing Association is continuing its efforts to what it hopes will be a successful finish, while working with the industry to make sure it will quickly transition to the new rules.
While the United States Treasury will not say much either way during the current 90-day comment period that runs through the end of the month, in December it issued a 31-page document that clarifies the total bet amount on a ticket will be used to determine the 300-1 threshold in reporting and withholding of large winnings.
Currently a $1 trifecta wheel of 10 combinations is viewed as 10 bets of $1 each. If a payout of $600 or more at odds of 300-1 or higher is awarded, that payout must be reported to the IRS. If that same wager pays $5,000 or more on odds of 300-1 or higher, some of the winnings must immediately be withheld for taxes.
The change would affect how the 300-1 threshold is determined. Under the change, the $10 ticket in the scenario above would be considered a $10 wager. To reach 300-1 odds, the payout must be more than $3,010, which means far fewer big payouts will need to be reported.
While the December report was favorable, the NTRA is working to make sure the changes clear any final hurdles while also acting to make sure horse racing will be ready to act should the changes become official.
During the 90-day comment period, the NTRA again called on the industry to show its support through e-mails in support of the change. The NTRA reports that virtually every comment submitted to the Treasury has been supportive of the proposed regulatory changes, and there appears to be no organized opposition to the updates.
Also, the NTRA is actively seeking the support of a bipartisan group of members of Congress from key racing states to urge the Treasury to finalize the changes in a timely manner once the public comment period concludes March 30. While nothing is guaranteed, it is expected to take a month to 45 days to become official after the public comment period closes.
The NTRA is leading the way on making sure the industry is ready to put the changes in place.
“We’re determined to implement this new tax structure on Day One without a hitch,” said NTRA president Alex Waldrop. “There are a lot of moving parts but fortunately everybody is working together. We have a broad cross-section of the industry, technology providers who are familiarizing themselves with the (regulations). We’re very optimistic.”
The NTRA continues to engage with its lobbyists in Washington, as well as major tote companies, racetrack operators, and ADWs—both individually and as a group—to outline an implementation plan for the proposed rules. Just last week, the NTRA led a conference call that included officials from tote companies AmTote, United Tote, and Sportech; as well as the Las Vegas Dissemination Company, William Hill, TVG, Thoroughbred Racing Associations, and the Thoroughbred Racing Protective Bureau, among others.
Tote companies would update their software to recognize the new definition of how the 300-1 threshold is determined.
“The collaboration around this effort is unprecedented and we are confident that we will be prepared to implement these important regulatory changes as soon as the new regulations become law,” said NTRA chief operating officer Keith Chamblin.
The NTRA also plans additional communication and education for horseplayers. A big part of that will be emphasizing the potential advantages of including multiple wagers on a single ticket.
“We realize that there may be a period of adjustment for customers as they gain a better understanding of the benefits derived from the new regulations,” Chamblin said. “A customer communications plan already is under way and will continue well after the proposed regulations become law.”