Freehold, NJ --- The United States Trotting Association (USTA) today endorsed a bi-partisan Congressional request to change the manner in which the Internal Revenue Service (IRS) calculates pari-mutuel earnings for tax purposes to the benefit of the entire racing industry.
The effort, spearheaded by 17 Congressmen from racing states, asks the IRS to clarify a policy that the total amount wagered into a pool by an individual will be used to determine whether the winnings are at least 300 times the amount of the wager.
The current IRS ruling was developed long before most of the current exotic wagers were developed and does not take into account the actual cost of the wager to the customer, who may have many combinations in the same wagering pool, at a cost exceeding the actual winning ticket.
The current policy has the effect of excessively withholding tax from gambling winnings, which in turn, removes money that might have otherwise been available for that customer to wager. It effectively diminishes a customer’s resources to re-wager and reduces betting pools, to the detriment of the track, horsemen and ultimately state and federal governments who share in racing revenue. For example, if an individual buys $200 worth of tickets to hit an exotic wager on a single $1 ticket, the tax policy would use $200 as a basis for calculating tax, not $1.
Those who would like to sign a petition asking the IRS to clarify this policy to the benefit of all in racing, can do so here.
There are currently a little over 3,000 signatures on the petition to the IRS ratifying the Congressmen’s request, with a goal of 5,000 signatures.
“This is a common sense policy that benefits everyone involved in each dollar wagered – the customer, the horsemen, owners, the track and the government,” said Phil Langley, president of the USTA. “There are existing protocols to ensure that the appropriate tax is collected on earnings at year’s end. We hope the IRS will see that adjusting this policy makes good business sense for all parties with a financial stake in horse racing. I hope all those who make their living through racing will sign the petition and urge their friends to do so, as well.”