Modernized IRS Rules Lead to 89% Decrease in Wagers Subject to Reporting

[Wandering Eyes]

In the first year of operations under a newly modernized U.S. Treasury and Internal Revenue Service regulations, there was a $307-million reduction in the amount of winning parimutuel wagers reported to the IRS using form W-2G, according to statistics released Wednesday by the National Thoroughbred Racing Association, who pushed for over a decade to have the rules changed on Capitol Hill.

This decrease was the result of a dramatic 89% drop in the number of winning tickets flagged for IRS reporting, and led to a $35-million reduction in the amount withheld from bettors’ winnings. The new regulations, which took effect Sept. 28, 2017, recast the Treasury’s definition of the “amount of the wager” to include the entire amount wagered into a specific parimutuel pool by an individual, rather than the prior IRS standard of using only the base amount of the winning wager.

“The drastic reduction in the number of winning tickets requiring reporting and withholding is consequential in several ways,” said NTRA President and Chief Executive Officer, Alex Waldrop. “Under the old regulations, it was not uncommon for horseplayers to feel the thrill of ‘winning’ only to have their proceeds reported and/or withheld by the IRS. The old regulations were both unfair and a burden to all involved. A significant overreach by the IRS has been corrected thanks to fair-minded officials at the U.S. Treasury.”

Through September of this year, U.S. wagering has increased 3.95%, or $336,724,709, overall, while average wagering per race day has increase 7.67%, or $180,231, according to Equibase statistics.

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