As of November 7th, new IRS protocol that benefits horseplayers has been implemented by our Tote provider. Withholding and reporting standards are now based on the entire cost of a pari-mutuel ticket rather than each individual combination on that ticket!
- Under the new regulations, the amount you wagered into a single pari-mutuel pool will be used when determining the amount reported or withheld for W-2G tax purposes, as opposed to only the amount wagered on a single winning combination.
- Under the updated rules, the IRS will look at the amount you wagered into a pari-mutuel pool when determining if a wager needs to be reported or if money needs to be withheld. Prior to this, the IRS only looked at the winning base combination amount.
- Winnings of $600 or more from 300-1 or greater odds will still be reported with money withheld. The updated rules impact how the IRS determines the 300-1 odds. In the past that had been determined by the base wager amount. Now, it is determined by the amount a customer wagers into that pari-mutuel pool, making it less likely that your wagers will meet the criteria for reporting and withholding.
- EXAMPLE – If you bet the following $2 Pick 4 ticket:
- Leg 1: 2,5,6,7,9
- Leg 2: 2,6,7
- Leg 3: 1,3,5,7,9
- Leg 4: 6,9
- Total Cost – $300. If this ticket were to pay $8,000, under the old rules this would be a reportable ticket that required withholdings. It is more than $600 and 300 to 1 at a $2 ticket cost whereby $2 is the multiplier. You would receive $5,998 to your account, with $2,000 withheld. Under the new rules, the multiplier is the entire $300. Now, not only is this not a withholding ticket but it isn’t even reportable, saving you $2,000 in withholdings.
Per NTRA estimates, these updated regulations could lead to an increase in wagering on U.S. races of as much as $1 billion!!