Fewer IRS signers after tax changes

Federal tax-reporting changes implemented in the fall of last year have resulted in a decline of $307 million in the amount of total winning wagers reported to the IRS in the past year, a drop of 82 percent, according to figures released Wednesday by the National Thoroughbred Racing Association, which lobbied for the changes.

According to the figures, the number of parimutuel tickets reported to the IRS since the tax-reporting changes were implemented on Sept. 28 of last year has fallen 89 percent, from 235,100 tickets in the year prior to approximately 26,350 tickets in the next 12-month period. In addition, the amount of federal taxes withheld from winning tickets declined 82 percent, from $43.2 million to $7.8 million, the NTRA said.

“The results are staggering,” said Keith Chamblin, the NTRA’s senior vice president. “And the results are across the board, no matter the track or the event day.”

The tax-reporting changes allow bettors to count the entire amount bet in a single wagering pool for the purposes of calculating tax reporting or withholding, instead of the base amount of the wager. The changes, which have their largest impacts on exotic and superexotic bets, were implemented after years of lobbying by the NTRA.

The NTRA arrived at the numbers by analyzing data in the California Horse Racing Information Management System, which includes bets from a wide variety of sources. The national numbers were extrapolated from those figures.

The changes were universally welcomed by horseplayers, who had long complained that the tax-reporting rules were anachronistic in an era in which exotic betting has come to dominate horse race wagering.

“The new regulations have been enormously beneficial to every sector of our business,” Alex Waldrop, president of the NTRA, said in a statement.

The changes were expected to generate growth in handle on U.S. races, and through the first nine months of this year, total betting on U.S. races has been up 4.0 percent, despite a 3.1 decline in the number of U.S. races, according to figures from Equibase. Per race, betting on U.S. races is up 7.2 percent in the first nine months of the year.