Welcome home from NYRA
 

I received the following letter from NYRA when I got home today. This was the topic of conversation during the last 1/2 of ATRAB this evening. I would guess that other ADW outfits will soon be instituting similar policies as I can't imagine that this is only applicable to NYRA ONE / Rewards account holders.


Dear NYRA Rewards Member:

We are writing to inform you of new procedures regarding the way winnings are released to your account under certain circumstances. Under the IRS Code, certain gambling winnings are reportable to the IRS on form W-2G. Generally, gambling winnings are reportable if the amount paid reduced by the cost of the winning wager(s) is (a) $600 or more and (b) at least 300 times the amount of the winning wager. In those instances where the gambling winnings reduced by the amount of the winning wager exceeds $5,000; Federal withholding tax is required in the amount of 25%.

As an illustration of how the IRS determines the cost of any wager, a $1 trifecta box bet 1-2-3 at a total cost of $6, is considered six $1 bets. Under those circumstances where winnings are derived from identical wagers (same track, race, pool, and winning numbers) all identical wagers must be added together for purposes of determining if the winnings are subject to IRS reporting and/or withholding requirements. Using the Trifecta example above if the bettor repeats the same bet and each bet results in a $400 winner, these two winners must be added together for a total of $800 minus the two $1 costs; $798 would be reportable to the IRS. If the total payout of the identical wagers exceeds the $5,000 threshold (total payout minus the cost of the wagers), 25% withholding is required.

Current technology employed by NYRA's tote provider is unable to identify and manage identical wagers automatically. Effective immediately, NYRA will release 100% of your winnings that are 300-1
or greater. NYRA personnel will determine whether or not these winnings include identical wagers that are subject to IRS reporting and/or Federal withholding tax. This review will normally be completed within one [1] hour. If it is determined that the winning wager(s) includes identical wagers that must be aggregated and subject to Federal withholding tax, your account will be charged Federal withholding tax at 25% as a separate entry. For winning wagers that are subject to Federal withholding tax, a multipart W-2G form will be mailed to your address of record. Please sign this form and return a copy to us in the postage paid pre-addressed envelope provided. For those winning wagers that are reportable a W-2G will be mailed to your address of record and this form should be retained for filing purposes.

We are currently working with our tote provider to automate this process and expect to have this issue resolved by mid-July. Once this process is automated, winnings subject to withholding and reporting will be handled in real-time.


We appreciate your patience and thank you for your participation in the NYRA Rewards program. If you have any questions regarding this matter please give us a call at 1-800-843-6972.


Sincerely,

John Ryan
NYRA Chief Administrative Officer

Ugh. . . Glad I don't bet online. . .

Criminal

I got the e-mail last week and the letter today. Can't say I'm happy.

So if you bet multiple $1 tri's... and the tri only pays $350, but you have it four times, Uncle Sam knocks on the door?

Maybe I'm missing something here, but isn't this letter indicative of the same policies in place at every American wagering outlet?

NT

That is correct Travis. A lot of these in government guys are crooks. They think they don't go to the bathroom like we do.

hiccup.

Rewards Program. LOL.

Rewards for the beaurocrats, :) ...they aren't elected to anything but they love their bennies and pensions at our expense.

The rewards program refers to the cash rebate that NYRA gives to players who bet through NYRA-One.

Rewards program, taxes, refers to immense taxes in NYS soley for the benefit of government employees.

Have another cocktail.

Are you a tax sucking pig ? If you are when are you gonna give us working folks a tax break ?

You are a jerk...are you the board cop ? If not then shut up and stick to the topic.

Here it goes, down into my belly...

On the subject of NYRA reporting IRS information above and beyond the norm....

Does it not make sense that....

1) If YOUBET or TVG accounts can be used for NY tracks, then we should all minimize playing NYRA if not cancel accounts with NYRA solely based on this violation of privacy.

2) Ask the lawyers among us if this new stance from NYRA does in fact break the law as it is not the business of NYRA to feel as if they can provide this info without our consent.

It is likely that NYRA is doing this to be on the good side of the Federal Government (IRS) as they in fact are very influential in setting the rules of business which seem to literally change monthly.

Actually, technically one could make the case that they are on the wrong side of the law if they aren't doing this.

They have our " consent " when we sign up for an account.

If I read this correctly, this is just another reason to go to the track more. I can play a $1 tri box 10 times there, have it pay $450, and not have to pay taxes on it, but if I play it online I get taxed....

unless other ADW start doing this NYRA One is going to get killed unless there are no options for New York residents

This is garbage. I got the letter today as well- Uncle Sam is already chasing me for 2005 and 2006 and I'm serious, I'll go to court before I pay taxes on ANY IRS reported wagers. The law is so arcane and unfair it's sickening. If you go to the casino and hit a slot machine for $9,999, nothing is reported. But if you go to the track and you hit a f*cking $600 tri (with money that hypothetically has already been income taxed) you get whacked by the IRS. Screw them, I'll go to jail for a couple days for the sake of horse players everywhere. They can make a f*cking example out of me.

This does suck. It won't be long before all ADW's are doing it.

I'm sure when the "law" was written, the minimum bet was $2, this is catching up to the relatively new (at least to the Government) $1 wager.

Wait'll they start banging the .10 Supers. Every time you hit for $30.20, wham, W2G. There'll be a run on the forms. I'd like to have stock in the printing company.

I'm not sure this is relevant, but I was a mutuel clerk in college, and we were SUPPOSED to ask everyone who ever cashed a ticket "Do you have any identical tickets to cash?" But we never did, and the track knew we never did, and they didn't really care.

I'm sure I'm missing something glaringly obvious, but how? The intent I interpreted from the letter is that derivative of the bet is insignifigant unless played multiple times, resulting in a win of 600.00, minus the cost of the initial play, right?

In this case, the end result is 30.20, they can't assume that it was a fractionalized 2.00 bet, unless it was bet for a dime 20 times on twenty separate tickets..... Can they???!!! :eek: :eek: :eek:

I seriously didn't read it that way.

It's exactly relevant. The letter of the law says that it is, in fact, the aggregate that matters, and technically if one has multiple tickets they need to be cashed and bunched together. However, tracks have looked the other way. For some reason, that hasn't been explained yet, NYRA is now batching these bets.

I don't care about the new signers it will generate, but when I end up with withholding because of the batching, which will certainly happen, I am going to be pissed. However, it's only an immediate inconvenience.

The reality is that this further underscores the necessity to raise the withholding threshhold......something the NTRA should have made a priority, and achieved, years ago.

To repeat from an earlier post of mine, I still can't say I understand the role of the NTRA in this sport.

This is exactly the kind of thing they should have handled. When it became essential to change tax laws in order for Canadian tracks to co-mingle they managed to get that done quickly. But, of course, that had a great benefit to racetracks and the withholding has a more obvious effect on horseplayers only so they dropped the ball. They are too busy ( or were ) pretending to attract new fans, so those people could possibly get screwed down the road, to care about the true existing fans. Of course, as withholding takes money out of circulation, in essense racetracks get screwed as well. Just not as severly as horseplayers.

It was a bad attempt at humor RBE. I should've stopped the post before that.

I figured that after I posted ... Should have learned not to post replies before the morning coffee kicks in :p

Didn't know you were in New Port Raunchy - We may be neighbors....

Phil, where are you gambling at a casino where they take take out taxes on any hit over $1199. The way to get around paying the federal taxes is to just show losses up to your winnings. Recycled money is a wonderful thing.

Shouldn't this "batching" go both ways. If you laid out $2400 in pick-6 combinations and you hit it for $3000 shouldn't you only be taxed on your winnings,$600. Could this possibly be interpreted this way?

No, it is clearly definied that you can't interpret it that way.

But, he's partially right........it should be.

Casinos don't take taxes out. They present you with a W2G if you win more than $2,000, and a IRS Form 8300 if you move more than $10,000 at one time.

It isn't as simple as you state if you have a significant number of IRS transactions- the income/writeoff raises an audit red flag, and on top of that the writeoff isn't a straight one for one as your AGI goes up with each additional reporting; therefore you move into a new tax bracket even if you write off the entire amount. It's all a crock of f*cking bullshit which they implemented back in the '50's or so to defense against money laundering at the track.

Absolutely. Unfortunately trying to interpret it that way isn't going to work as they are pretty clear about that sort of situation.

Trouble Sleeping? - Read this
 

I'm NOT a lawyer but I am a CPA that works in the field of Tax. After reading the letter last night I decided to do a little research into the history and justification of the withholding requirements. (YAWN) I do not know why as I have never had a signer, I came close last week at Belmont but still have yet to make that big score. Hopefully Saturday, Go Digger! Anyway if your inclined to know the history for the multipe wagers vs. single wagers below is a brief history.

Nearly 20 years ago there was a Private Letter Ruling ("PLR") issued by the IRS in response to someone asking whether a three horse exacta box was one bet or six bets for purposes of computing the amount to be reported withheld. If you're so inclined to read look for it or read it is PLR7823066.

The PLR states "the derivation of the rule in the Instructions for Form W-2G and 5754 that multiple wagers shall be considered as seprate debts is the Conference Report as Filed by the Conference Committee on Septemner 13, 1976 on Public Law 94-455 (Tax Reform Act of 1976), which reads as follows:

"Under the conference agreement, it is intended that therm 'wagering pool' is to include all paimutueal betting pools, including on and off track racing pools, and similar types of betting pools."

The PLR goes on to say "The conference agreement also makes it clear that withholding applies to winnings net of the ticket price taking into account all tickets for identical wagers. For example if one $100 bet and two $50 bets are placed on a single horse to win a single race track event, any winnings from the three tickets should be added together and the ticket prices of all three tickets should be deducted to determine net winnings. However, if the bets are placed on different horses or on different events, the net winnings are to be determined separately for each ticket."

I knew that these rules were antiquated but I didn't realize that they were drafted long before the advent of most of the exotic wagers of today. It is absurd that these rules would still be applicable to pick 3s, pick 4s, pick 6s as well as fectas both Tri and Super that are a significant amount of the wagering base in the US today.

In summary the current tax treatment is based on a conference committee report from the enactment of the 1976 Tax Reform Act and not any enacted tax legislation. That doesn't mean that it is "bad" law for NYRA or any other tracks or wagering service to be following.

Pick up a copy of Steven Crist's Exotic Betting. There is a whoile chapter devoted to the issue.

It also goes into detail on estimates as to how much handle tracks are losing each year because of the withholdings.