The National Thoroughbred Racing Association said June 3 members of Congress have asked the United States Department of Treasury to clarify regulations on the taxing of pari-mutuel wagers. The trade organization also is asking bettors to support an online petition calling for reform.
The letter was co-authored by Republican Rep. Charles Boustany of Louisiana and Democratic Rep. John Yarmouth of Kentucky.
The NTRA said the request for clarification urges inclusion of a bettor's entire investment in a single pari-mutuel pool to determine the amount reported or withheld for tax purposes. The taxes currently are based on the amount wagered on a winning combination.
The goal of the effort is to allow pari-mutuel bettors to keep more of their winnings and reinvest money in other pools. The NTRA used the example of a Pick 6 player who wagers $140 into the pool, but instead of using that total amount to determine reporting or immediate withholding thresholds, each $1 increment is used.
"By understating the amount wagered in this manner, the Internal Revenue Service is erroneously imposing significant additional reporting and withholding obligations on horseplayers," the NTRA said. "The clarification would directly benefit pari-mutuel customers by reducing burdensome tax obligations and allowing them to retain more of their winnings, some of which will likely be reinvested at the betting windows."
NTRA president and chief executive officer Alex Waldrop said the current tax structure damages the pari-mutuel industry's primary revenue stream.
"We applaud congressmen Boustany, Yarmuth, and others for their leadership and their awareness of the significant economic contributions that horse racing and breeding make in their states," Waldrop said. "We look forward to working with them on this important issue."
The NTRA has lobbied for the change for years.
Officials said the current calculation of pari-mutuel winnings for tax purposes is based on a 1978 Internal Revenue Service ruling that pre-dates interstate full-card simulcasts and an expansion into exotic wagers such as "pick bets" and superfectas. The ruling conflicts with Treasury regulations that say wagers in the same pool shall be treated as one bet, the lawmakers said in their letter.
The NTRA said the "Change.org" petition is available at http://chn.ge/RXZ6DW.
