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Horseracing Wins As Treasury/IRS Issue Updated Tax Rules

The U.S. Treasury Department and the Internal Revenue Service (IRS) today announced that they will formally adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds. The National Thoroughbred Racing Association (NTRA) has long pressed for these updated regulations that will allow horseplayers to keep more of their winnings, thereby increasing the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, or upwards of $1 billion, according to independent estimates. The new rules were posted late Monday afternoon as a Public Inspection Document. They are scheduled to be officially published in Wednesday’s edition of the Federal Register and will go into full effect by no later than Nov. 14, giving racing associations, totalisator companies, and advance deposit wagering (ADW) operators up to 45 days to implement these important changes; however, some may elect to start as soon as Thursday.

“These landmark U.S. Treasury regulations will have an enormously positive impact on horseplayers, the racing industry, and the federal government,” said NTRA President & CEO Alex Waldrop. “I am extremely proud of the NTRA’s legislative team for spearheading this effort, which will prove to be among the most meaningful regulatory advances made by our industry in decades. The results of this much-needed measure will be horseplayers keeping more of their winnings, racetracks generating more pari-mutuel handle, and government collecting additional tax revenue. This is a sure bet where everyone wins!”

Added Waldrop: “This day would never have come without the persistence of Thoroughbred racing’s friends in Congress, especially Rep. John Yarmuth of Kentucky, Rep. Pat Meehan of Pennsylvania, Senate Majority Leader Mitch McConnell and our many bipartisan supporters on Capitol Hill. We also are indebted to the industry stakeholders and thousands of customers of Thoroughbred racing who signed our petition or submitted public comments in favor of these changes.”

Under the new regulations, the IRS will consider the inclusion of a bettor’s entire investment in a single pari-mutuel pool when determining the amount reported or withheld for tax purposes, as opposed to only the amount wagered on the correct result.

For example, the amount wagered by a Pick Six player who hits with one of 140 combinations on a $1-minimum wager now will be $140, which is the total amount bet into the Pick Six pool. This more accurate calculation will remove the significant reporting and withholding obligations on horseplayers and the unnecessary paperwork for the IRS that was a result of the prior rule that used only the $1 bet on the single winning combination as the amount wagered.

“This is a major victory for all pari-mutuel wagering customers,” said Judy Wagner, the Horseplayers’ Representative on the NTRA Board of Directors and winner of the 2001 National Horseplayers Championship (NHC). “It would not have occurred without the leadership of the NTRA and the support of thousands of horseplayers who actively participated in the process to modernize these regulations.”

The amended regulations, advocated by the NTRA and its legislative team, define the “amount of the wager” to include the entire amount wagered into a specific pari-mutuel pool by an individual – not just the winning base unit as is the case today – so long as all wagers made into a specific pool by an individual are made on a single totalisator ticket if the wager is placed onsite. The modernized regulations will have the same positive results for ADW customers and will not impact how those wagers are currently made.

View the full text of the new rule under section 3402(q) of the Internal Revenue Code here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-20720.pdf.

The NTRA has pushed for the modernization of pari-mutuel withholding and reporting rules for several years. As more and more pari-mutuel wagering was directed toward exotic wagering pools it become clear that the tax rules were becoming an increasing and unfair burden on horseplayers as those outdated rules significantly increased the incidence of winning tickets subject to withholding and reporting. These new rules are the product of all the work the NTRA, and other industry stakeholders, undertook with Congressional representatives and Treasury and IRS officials.

“This represents a great triumph by the entire NTRA legislative team, including the bipartisan Horse PAC, which played an instrumental role in the passage of these regulations that will benefit all segments of the industry,” said Horse PAC chairman William S. (Bill) Farish. “We thank the hundreds of individual stakeholders who contribute to Horse PAC; they played a major role in today’s victory.”

Waldrop noted that the NTRA has been working behind the scenes since January with industry groups – including totalisator companies, ADWs, and racing organizations – to ensure a smooth implementation for customers.

“For the industry to fully realize the benefits of modernized regulations for pari-mutuel withholding and reporting it is essential that we deliver a seamless transition to our customers,” he said. “We are optimistic that the industry will be fully prepared to institute these landmark changes by no later than November 14.”

About the NTRA
The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety and Integrity Alliance; NTRA.com; the Eclipse Awards; the National Handicapping Championship; NTRA Advantage, a corporate partner sales and sponsorship program; and Horse PAC®, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).

New Withholding, Reporting Rules Near Enactment

A document outlining upcoming federal regulatory actions released July 20 by The White House indicates that modernized tax guidance relating to withholding and reporting of pari-mutuel winnings is nearing enactment, the National Thoroughbred Racing Association said.

The “Current Unified Agenda of Regulatory and Deregulatory Actions” describes the Amendment of 3402(q) Regulations providing new rules for pari-mutuel wagering as in the final rule stage.

The regulation, detailed by the Internal Revenue Service and U.S. Treasury in the Dec. 30, 2016 Federal Register in a section titled “Withholding on Payments of Certain Gambling Winnings,” accomplishes goals started and spearheaded by the NTRA three years ago.

“We are pleased to see this latest indication that the regulation continues to make its way toward final approval,” said NTRA president and CEO Alex Waldrop in a release. “We take nothing for granted, though, and will continue to work closely with our allies in Washington, D.C., to get this important change completed. We urge Treasury and the IRS to act quickly so horseplayers, the racing industry, and the federal government can all start benefitting from these landmark rules.”

The proposed regulations, developed with the NTRA’s guidance, clarify “the amount of the wager” to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single tote ticket if the wager is placed onsite. The proposed regulations would have the same positive results for advance deposit wagering customers and would not impact how those wagers are currently made.

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.

The NTRA said the regulations will positively impact a significant percentage of winning wagers, particularly those involving multi-horse or multi-race exotic wagers, and result in tens of millions of dollars in additional pari-mutuel churn.

H-2B Provision Stays in Congress-Approved Spending Bill

An industry-supported provision that could allow additional foreign, seasonal H-2B visa workers made it through Congress as part of the government-funding bill signed by the Senate May 4.

As the House of Representatives approved the spending bill earlier this week, it now awaits an expected quick signature from President Donald Trump.

Currently only 66,000 H-2B seasonal work visas are allowed to be granted this year, but a provision in the spending bill, which funds the government through the fiscal year that ends in September, would give the Secretary of Homeland Security, in consultation with the Secretary of Labor, the authority to nearly double the H-2B cap when it’s determined there is an economic need.

National Thoroughbred Racing Association president Alex Waldrop said the NTRA will now work with the administration to get the H-2B provision implemented.

Horse racing is just one of many industries that relies on the H-2B visa program, joining businesses such as landscaping and seasonal resorts.

Congress in 2016 failed to renew the “returning worker exemption” that permits H-2B workers from the previous three years with clean records to enter the country again without counting against the 66,000 cap. That exemption had effectively raised the number of workers under H-2B from 66,000 to approximately 190,000.

Twelve Congressmen Sign Letter Urging Treasury To Enact Recently Proposed Tax Reporting, Withholding Regulations

LEXINGTON, Ky. (Wednesday, April 12, 2017) – Twelve members of Congress from a number of key racing states have signed a letter delivered to the Department of Treasury requesting that recently proposed Internal Revenue Service (IRS) regulations relating to the way pari-mutuel winnings are calculated for tax withholding and reporting purposes be finalized as soon as possible.

The letter was in response to actions taken by the Treasury and Internal Revenue Service (IRS) in late December when the Treasury issued proposed regulations relating to withholding and reporting of pari-mutuel winnings. The 31-page Treasury document, entitled “Withholding on Payments of Certain Gambling Winnings,” accomplishes the goals championed by the NTRA nearly three years ago to modernize regulations related to pari-mutuel winnings. The proposed regulations will positively impact a significant percentage of winning wagers, particularly those involving multi-horse or multi-race wagers, and are expected to result in tens of millions of dollars in additional pari-mutuel wagering.

The proposed regulations clarify ‘the amount of the wager’ to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single totalizator ticket if the wager is placed onsite or through a single account if the wager is placed electronically.

The letter, which garnered bipartisan support, was co-authored by Rep. John Yarmuth (D-KY) and Rep. Patrick Meehan (R-PA). The additional signatories are Rep. Andy Barr (R-KY), Rep. James Comer (R-KY), Rep. Brett Guthrie (R-KY), Rep. Donald Norcross (R-NJ), Rep. Devin Nunes (R-CA), Rep. Bill Pascrell Jr. (D-NJ), Rep. Hal Rogers (R-KY), Rep. Thomas Rooney (R-FL), Rep. Kurt Schrader (D-OR), and Rep. Paul Tonko (D-NY).

“As you know, these regulations would update existing Treasury rules (Treas. Reg. Sec. 31-3402(q)-1) governing the reporting and withholding of certain pari-mutuel wagers. These rules have not been updated since the 1970s and we were pleased that Treasury responded to our requests to bring these regulations up to date,” the Congressmen wrote in a letter dated April 4, only days after a 90-day public comment period concluded. “The proposal better reflects the current pari-mutuel wagering environment and will lead to increased compliance while reducing burdensome paperwork, creating an overall system that will be more accurate and equitable for taxpayers.

“We look forward to these modernized rules being fully implemented and request that you act on this matter as quickly as practicable,” the letter concluded.

A copy of the full letter can be accessed at the following link: https://www.ntra.com/wp-content/uploads/2017.04.04-Treasury-Pari-Mutuel-Winnings.pdf

“There is widespread agreement that these newly proposed Treasury regulations will reduce burdensome paperwork while creating a new system that is more accurate and equitable for taxpayers,” said NTRA President and CEO Alex Waldrop. “Throughout this process, the issue has received bipartisan support from members of Congress and we thank Representatives Yarmuth and Meehan, along with the other co-signatories, for leading the effort to modernize these regulations related to pari-mutuel winnings.”

About the NTRA

The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety and Integrity Alliance, NTRA.com, the Eclipse Awards, the National Handicapping Championship, NTRA Advantage, a corporate partner sales and sponsorship program, and Horse PAC, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).

NTRA Keeping Busy on Tax Withholding, Reporting Changes

NTRA Keeping Busy on Tax Withholding, Reporting Changes

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.”

NTRA Establishes Process for Urging Treasury to Enact Proposed Pari-Mutuel Regs

The National Thoroughbred Racing Association (NTRA) today announced that a system has been established at https://www.ntra.com/comment for individuals to submit an e-mail comment directly to the United States Treasury Department in support of newly proposed regulations related to withholding and reporting of pari-mutuel winnings.

The proposed regulations, which would replace outdated regulations adopted nearly 40 years ago, more accurately reflect today’s pari-mutuel wagering environment and will positively impact a significant percentage of winning wagers, particularly those involving multi-horse or multi-race exotic wagers. It is believed that the proposed changes will result in tens of millions of dollars in additional pari-mutuel wagering annually. If adopted, the new regulations will not only  promote greater compliance and more accurate reporting and withholding by taxpayers but also reduce burdensome and needless paperwork system-wide.

Efforts spearheaded by the NTRA on behalf of the industry over the past two and a half years came to fruition on December 30 when Treasury and the Internal Revenue Service (IRS) published proposed guidelines designed to modernize withholding and reporting regulations. The 31-page Treasury document, “Withholding on Payments of Certain Gambling Winnings,” clarifies the phrase “the amount of the wager” to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today.

In the NTRA’s official response to Treasury on behalf of the industry, submitted Wednesday, NTRA President and CEO Alex Waldrop thanked the Treasury and IRS for recognizing the need to modernize regulations related to the withholding and reporting of pari-mutuel winnings and noted that the newly proposed regulations sufficiently address the industry’s concerns. Waldrop asked the Treasury and IRS to enact the new regulations as quickly as possible following a 90-day comment period that concludes on March 30.

“With horseracing’s all-important Triple Crown season fast approaching, the NTRA urges Treasury and the Service to adopt the proposed regulations as final regulations as soon as it is administratively feasible. Horseplayers, tracks and other industry stakeholders, including governments, are eager to begin reaping the benefits that will result from these updated withholding and reporting rules,” Waldrop said.

The public comment system at NTRA.com/comment provides each commenter with a clear, consistent message asking Treasury to adopt the proposed regulations and urging prompt action.

“A unified message of support is critical as the industry urges Treasury and the IRS to finalize the proposed regulations,” Waldrop added. “We ask all who participate in the horse racing industry to submit a comment to Treasury and the IRS using the NTRA system so that we can send the message loud and clear that all of horse racing supports these changes.”

Industry Asks for H-2B Visa Program Support

Urgent Efforts Continue To Reinstate H-2B VISA Returning Worker Exemption

Contact: Joe Bacigalupo, NTRA Federal Legislative Affairs, (859) 422-2677, joeb@NTRA.com

 

LEXINGTON, Ky. (Monday, December 5, 2016) – The National Thoroughbred Racing Association (NTRA), through its involvement in the H-2B Workforce Coalition, has joined other organizations and businesses in pushing to have the H-2B visa returning worker exemption reinstated in a continuing resolution that is being drafted to fund the federal government through March 31, 2017.

H-2B visas are used by employers to fill temporary, non-agricultural positions that they are unable to fill with domestic workers. Horse trainers and other industry participants use the H-2B visa program to hire grooms and other stable help. The H-2B visa program has an annual cap of 66,000 visas. Qualified workers who complied with past visa requirements and worked in the program during one of the preceding three years will be excluded from the cap through the returning worker exemption.

The NTRA asks industry members to contact Congressional leadership immediately and express the horse industry’s concerns and the need to reinstate the H-2B visa returning worker exemption.

Starting today, Dec. 5, industry stakeholders are urged to contact Sen. Mitch McConnell at 202-224-2541 or through Sen. McConnell’s email contact form and Rep. Hal Rogers at 202-225-4601 or through Rep. Rogers’ email contact form (limited to constituents) in Washington, D.C.  Once connected to the office, ask to speak to the person who handles H-2B issues.  Tell them Congress must understand that a failure to reinstate the H-2B returning worker exemption before March of next year will hurt horse racing and agriculture industries and result in the loss of critical jobs. You may use this same language in the message section of the email contact form.

For those with Twitter accounts, tweet #saveH2B to @SenateMajLdr and @RepHalRogers with the following message:  “Include H-2B returning worker exemption in CR-critical horse racing and agriculture jobs are at stake!”  In separate tweets with the same message, you may also consider tagging other members of Congress and @HouseAppropsGOP.

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