September 27, 2017
We’re excited to announce that beginning Thursday, September 28, 2017, we will implement the updated tax rules that were recently adopted by the U.S. Treasury Department and Internal Revenue Service (IRS).
These landmark regulations are a gigantic victory for horseplayers and we’re eager for Xpressbet customers to benefit from them. By quickly implementing these changes, customers will see the advantages in advance of the Breeders’ Cup World Championships.
Under the new regulations, the IRS will consider a bettor’s investment in a single pari-mutuel pool when determining the amount reported or withheld for tax purposes, as opposed to just the amount wagered on the winning combination. This will greatly reduce the number of wagers where funds are withheld, as well as the number of taxable events for customers.
According to the National Thoroughbred Racing Association (NTRA), these changes may increase the amount wagered on U.S. races by as much as $1 billion.
How do the updated tax rules benefit horseplayers?
The IRS will now consider your investment in a pari-mutuel pool when determining whether a wager should be reported or if funds should be withheld. Previously, only the winning base combination amount was considered.
When will horseplayers receive a W-2G and when will there be withholding?
There are no changes. Wagers that pay off at odds of 300-1 and have a payout of $600 or more are still reported to the government. What has changed is how the IRS calculates the 300-1 odds. Previously that calculation depended on the base amount of the wager ($0.50, $1, etc.). Now it is based on the total amount wagered by the customer.
Automatic withholding is handled the same way. The thresholds remain odds of 300-1 and payouts of $5,000 or more. Once again, however, the total amount bet is used when determining if the payout was at least 300-1.
How does this work in real life?
For example, if you bet a $1 Pick 4 with 200 combinations (a $200 bet) and the bet pays $5,500, you will not receive a W-2G, nor will money be withheld, as it would have previously. Why? Because while $5,500 does fulfill the requirement of payout higher than $600 or $5,000, it does not fulfill the requirement of odds greater than 300-1, based $200 wagered.
Am I responsible for paying tax on my gambling winnings?
Nothing has changed here, either. Xpressbet highly recommends that you consult with a professional when preparing your taxes. You may still need to report your winnings even if you do not receive a W-2G and if nothing is withheld.
How do the updated tax rules benefit horse racing?
The NTRA estimates that these updated regulations may increase wagering on U.S. races by as much as $1 billion.
Is there anything else customers should know?
For a short time period, you may notice your withholdings are still based on the previous thresholds. All wagers that would have previously had withholding will go through a quick review process to ensure complete compliance with the new standards. The withheld funds will be applied back into customer's accounts as quickly as possible.