Tuesday, September 26, 2017

Finally, a Win

Like any horseplayer, I’m very pleased that IRS regulations regarding income tax reporting and mandated withholdings finally has been amended to reflect modern horse wagering reality.

Of course, the lengthy wait could have been averted had legislators asked the advice of industry stakeholders, any industry stakeholder, from the start.

But the industry itself must share culpability. Why? Because whenever it goes to Washington or into statehouses, it doesn’t speak with one voice. Considering that many tracks still do a bad job coordinating post times, this was, admittedly, more complex.

Conclusively, common sense has been applied to the 300-1 payoff provision, reflecting the amount wagered into a pool where potential boxcar payoffs are the rule rather than the exception. The good news is that there will be a lot fewer “signers” at every level.

Today if you made a simple $1 Trifecta box of three horses, a cost of $6, a $602 payoff does not reach the 300-1 mandate for reporting those winnings in the IRS. The new provision, finally, takes into account the sum total of the “investment.”

Of course, this change benefits wagering 1-percenters who bet much more money than it does the average player/fan. This is a huge boon to bettors who invest $2,000 chasing a Pick Six carryover pool, one that wins and pays $20,000.

The $18,000 score made above is the equivalent of betting on a 9-1 winning horse straight. A nice hit, sure, but by definition hardly a windfall.

In another context, allowing bettors to keep more of their winnings helps all stakeholders just as, say, lowering the parimutuel takeout would.

This is, for legislators who may be reading this, is what’s called churn. Human gambling nature being what it is, the more winning players get back the more they bet in return. When this is allowed to play out over time, it works. Revenues eventually increase.

The dichotomy is that it’s OK if gamblers are made to cool their heels but bet-takers don’t have to be as patient, allotting time to allow the process to do what it always has done; create more business. Generally, racetracks have taken a one-meet-and-done position.

In a statement released Tuesday, the change in regulations is expected to increase the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, at this juncture about $1 billion per year.

At first blush this estimate seems more hopeful than real, but were willing to take a wait and see stance. If wishes were horses, the hope is that we’re wrong and that the estimators prove, well, estimable.

Parenthetically, if only this could have been coupled with the elimination of breakage, those pennies from every payoff that hurts bettors at every level every day, especially the little bettor that needs to grind out profits. But I digress.

The official regulations will be published in Wednesday’s edition of the Federal Register and scheduled to go into effect Thursday if bet-takers can make it happen. Figure that all will get their accounting acts together ASAP.

Obviously, two words can sum up why all bet-takers should hurry their preparations forward: Breeders’ Cup.

Breeders’ Cup event days serve dual purposes; one is to crown potential champions, the other is to generate huge handle which benefits everyone who happens to be tethered to the industry, most especially the player.

Value will be available most everywhere on November 3rd and 4th at Del Mar and betting venues everywhere. Pool size is the result of large fields, competitive racing and heightened interest. The two days of Breeders’ Cup provides all that and more.

None of this would have happened without the considerable efforts of the National Thoroughbred Racing Association. The NTRA is the industry’s marketing arm and deserves props for eventually getting the job done.

Common sense dictates that this should have been a sprint. Instead, making this kind of progress, like everything else in this game, turns out to be a marathon. Meanwhile, we should be happy to celebrate winning for a change.

OK. What’s next?

Written by John Pricci

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