IRS Proposes Major, Positive Changes for Horseplayers

Special thanks to my friends and fellow horseplayers Judy Wagner and Chris Larmey , who were very instrumental in getting this done.  Judy and Chris traveled to Washington D. C. this past year to meet with U.S. Treasury officials to discuss the problems with the current pari-mutuel tax system and propose solutions for all of us players.  ~ Rich Nilsen

DEPARTMENT OF TREASURY AND IRS ISSUE PROPOSED REGS TO MODERNIZE PARI-MUTUEL WITHHOLDING AND REPORTING

Lexington, Ky. (December 29, 2016) – The Department of Treasury and Internal Revenue Service (IRS) today issued newly proposed regulations relating to withholding and reporting with respect to pari-mutuel winnings. The 31-page Treasury document, entitled“Withholding on Payments of Certain Gambling Winnings,” accomplishes the goals started and spearheaded by the NTRA more than two years ago. The effort to this point has included meetings between the NTRA and Treasury and IRS officials, visits to Washington by horseplayers, grass roots campaigns and direct contact involving thousands of industry stake holders, including bettors, as well as involvement by numerous Members of Congress, Governors and other elected officials.

Chris Larmey

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. The proposed regulations would have the same positive results for Advance Deposit Wagering (ADW) customers and would not impact how those wagers are currently made.

The proposed 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.

The proposed regulations will undergo a 90-day comment period and it is conceivable that they could be in place prior to the 2017 Triple Crown. As was the case during a similar comment period in 2015 that attracted nearly 12,000 comments, the NTRA next week will establish a convenient and simple method for industry stakeholders to encourage enactment of the proposed regulations.

In its 31-page rulemaking document, the Treasury and IRS cited numerous specific examples provided by the NTRA as reasons for the need to modernize and also referred to the many comments it received from individuals in support of the proposed changes.

“This is a tremendous step forward in our ongoing efforts to modernize pari-mutuel regulations to accurately reflect today’s wagering environment,” NTRA President and CEO Alex Waldrop said. “The NTRA remains thankful to everyone who has engaged in this process, including numerous industry stake holders, horseplayers, Members of Congress, Governors and other elected officials, especially Congressmen John Yarmuth (D-KY) and Charles Boustany (R-LA), who led the congressional effort. A unified message has gotten us to this point and we encourage everyone to continue to work through the channels we will be establishing as we seek to push these proposed regulations across the goal line.”

The complete Treasury and IRS rulemaking document is posted on NTRA.com and can be accessed here.

Congressmen Urge Modernization of Pari-Mutuel Tax Rules

YARMUTH, BOUSTANY PEN JOINT LETTER TO TREASURY URGING ACTION ON MODERNIZATION OF PARI-MUTUEL TAX RULES

LEXINGTON, Ky. (Wednesday, July 13, 2016) Two U.S. congressmen, Rep. John Yarmuth (D-KY) and  Rep. Charles Boustany (R-LA), have submitted a joint letter to the U.S. Department of Treasury Secretary Jacob Lew urging finalization of proposed rule changes regarding withholding and reporting of pari-mutuel winnings.  The letter to Treasury was submitted on July 12 and was posted today on the official Twitter account of Rep. Boustany (@Boustany).

In the text, Yarmuth and Boustany highlight the bipartisan support the new guideline enjoys, as well as recent congressional activity on the matter and the pari-mutuel wagering industry’s economic imWashington DC smallpact. The letter concludes: “As you are well aware, it has been more than a year since the proposed rule was first published and, as such, we strongly encourage you to act on this matter by finalizing the proposed rule.”

A PDF file of the complete letter can be accessed here.

The letter comes on the heels of language in a House Appropriations Committee Report issued last week that accompanied House passage of the 2017 Financial Services and General Government Appropriations bill. That report instructed the U.S. Treasury “to expedite final consideration of the guidance which would modernize the rules governing pari-mutuel wagering.”

A companion bill in the Senate containing identical “Guidelines for Pari-mutuel Winnings” has been passed out of committee and now awaits passage by the full Senate. Ratification of the Senate appropriations bill would not result in the proposed rule changes becoming law; the IRS and U.S. Treasury must approve changes to their regulations.

Recent actions by the House and Senate are the latest in a concerted, industry-wide effort to modernize regulations relating to pari-mutuel winnings. Updates proposed by the NTRA would clarify regulations by redefining the “amount of the wager” to include all of a bettor’s investment into a single pari-mutuel pool, and not simply the base amount of the winning combination. The effort has received support from Members of Congress as well as all segments of the horse racing industry, including customers, who last year submitted nearly 12,000 comments to the Treasury and IRS in support of the proposed change.