Originally Posted by
regnis
Of course--us horse players are all over this. I had advocated a much different approach than we wound up with, but it is still a significant improvement.
To over simplify, we used to have to sign (they did not withhold) on a $2.oo bet paying over $602. In other words---300 to 1. Where this became a problem was in pick 6's and superfectas and similar wagers, in that we might invest several thousand into the pick 6, so that the wager wasn't just $2.00. If you wager $10,000 (which is 5,000 $2.00 wagers) into a pick 6 and it pays $25,000, that is far from 300 to 1, yet you would be taxed as if the bet were $2.00.
Now, they will look at the entire amount wagered and not treat it as just a $2.00 bet. So you will be taxed if the win exceeds 300 x the total wager. The one caveat is that they will only count the wagers on that winning ticket. So if you play numerous tickets, which most pick 6 players do, only the total bet on the winning ticket is included.
This is a benefit to the big players and not so much for the smaller players, but at least it's something. We have been pushing for this change, in some form or the other, for years. Now if we can get states like Illinois to address the fact that you are taxed on the gross win, we would really achieve something. Although the change in the federal law will reduce the number of signers and thus reduce the gross in Illinois and similar states.
The change has not been implemented and is on a 90 day period for comment. With a new administration coming in, who knows if it will actually be implemented.
Of course, by law, all winnings are supposed to be declared, so it is almost like the IRS recognizing that only signers get reported. Keep fingers crossed.