by Brian Nadeau
October 5, 2017
It’s not often we get one to go in our favor in this game. Sure, we may win a photo, or our four-horse spread might go to the longest shot we used, but in terms of actual kickback to the player, it doesn’t happen too often. That’s why the IRS and US Treasury’s historic adoption of new modern regulations, in terms of withholding and reporting taxes, is a giant coup for us bettors, and it could have a tremendously positive impact on the game.
I don’t really need to rehash how terrible the original laws were, but quickly; think of handicapping a three-day Pk6 carryover, putting in a $2,000 ticket, hitting the bet for $1,600 (i.e. losing $400 overall) and yet, you still had to pay taxes! Huh?! Well, that’s exactly what was in effect for years and years and years, as the IRS viewed you’re $2,000 Pk6 bet as 1,000 individual $2 tickets, therefore you had to pay taxes because your $1,600 hit on a $2 play was well over the withholding threshold. Total bunk, I know, but that was the way the ball bounced for countless years. How much it cost all of us we’ll never know, but if you’re more than just a once a month player, and one who loves to play Pk4, Pk5 and Pk6s, chances are it cost you thousands upon thousands over the years.
Rehashing the past and the “woulda, coulda, shoulda” that it represented is pointless, but eagerly looking towards the future is another story altogether. Not only will the new withholding law put countless more dollars in our pockets, it should also be a windfall in terms of overall national handle, which is what drives the game and each and every racing circuit that we play. Back to that $2,000 Pk6 play; using a rough 25% tax guideline, on your $1,600 “hit,” you would have to pay $400 in taxes. On the face of it, it’s a $400 one-time deduction and it’s over and done with as soon as you pay. (Yes, I realize that, being under $5,000, the onus is on you to pay the taxes, but this is just an overall theoretical example).
But it goes a lot further than just the $400, as I’m sure everyone realizes that $400 is $400 you could be betting with. But do you also realize that $400 could be churned into potentially thousands more for you, in terms of betting? Let’s say, on that big carryover day, where the pool was in excess of $3 million, there were 1,500 individual Pk6 winners. In the above reference to betting the $400, that is assuming you simply bet it, lose it, and you’re done. Even in that scenario, the $400, multiplied by the 1,500 winners, would total $600,000. But again, that’s assuming literally every single person wagered it once and lost it. Are you catching my drift here? That’s obviously never ever going to happen, because countless people who wager the $400 are going to hit something, anything, end therefore keep going and going and going. That $600,000 of added money wagered could turn into millions upon millions upon millions, and that is the real coup here for racing.
I’ve heard guesstimates that say a billion dollars more a year could be bet on racing, now that the new tax withholding law has been put into place. Sure, it sounds like an obnoxiously large and wishful number, but my example above was for one singular day. And while $3 million Pk6 pools don’t come about too often, $400,000 Pk4 and Pk5 pools are almost daily in New York and California. And a signer is almost guaranteed on a daily basis at one or both of those tracks too.
I’m not sitting here telling you I know what racing needs and how to fix a sport that is desperately trying to attract new fans, but what I do know is that if it were to get an infusion of upwards of a billion dollars a year in new betting handle, it would go a long way to at least alleviating some of those problems and funding news way to figure out some solutions.