Breeder's Cup Thoroughbred Handicapping Contest

[redietz]

I'm not a horse player, so I'm hoping regnis and some others could fill me in. It's my understanding two topics are in the news regarding this contest, which involves a 10K live bankroll entrance fee. The first is that due to new tax reporting rules and regs on exotic wagering, the number of W2Gs that resulted from the Breeder's Cup wagering and taxes withheld on site were dramatically reduced, even though there were many mega-longshots, which would normally have resulted in much more being withheld.

The second is an argument regarding partnerships and team play, which is technically illegal but virtually impossible to monitor or control. Participants have signed some letters requesting certain individuals be disqualified for blatantly engaging in team play. In a similar vein, the Westgate SuperBook NFL Contest has often been the source of rumors regarding large numbers of entries being controlled by a few individuals, which theoretically enables an "economy of scale" to work in the favor of the people coordinating the entries.

If anyone is knowledgeable regarding either topic, please chime in.

[pkspins]

I looked up the tax one. Previously, tax was withheld based on each individual win vs. bet. So you could have lost all the bets but one, and had that one be 300x, and had to have tax withheld on that one win. Now, tax is withheld based on total wins for the ticket vs. total losses - only if that total win is 300x total bet is tax withheld.

This must've been a total nightmare at tax time for people who make a lot of horse bets. I'd be interested to hear what they think.

[regnis]

Redietz- to kind of repeat what PK said, the tax change made recently maintained the old 300-1 standard for taxation. However, it is now based upon the total amount wagered on that winning ticket, not the simple $1.00 or $2.00 wager wager. You used to sign at $602.00, or 300-1, as if the $2.00 ticket was the only wager you had made . Now, if you bet $200 in that race, you are taxed at 300-1 on that 200 wager, or 60,000. The one caveat is they don't look at the total bet on the race--they look at the total bet on that winning ticket. So this really helps on pick 5's and 6's where you may invest several hundred or even thousands on one ticket.

As far as the team playing issue, the rules are pretty vague. All the rules really state are the following:

"Collusion of entries between horse players is prohibited, as is any attempt to manipulate the results of the Tournament."

It is impossible to police. Also, people have been cheating for years by having entries in their wive's names and the like. I sat next to a guy at the NHC that had 1 entry in his name and one in his wife's. The rules there specifically state that each player must make their own bets, You can't have someone else walk it up to the window for you. His wife was not there so "her" entry should have been disqualified as he was making her bets. But this is a way to have 4 or more entries and be able to cover all the long shots.

Cheating is a constant, so I feel you just deal with it. No sense getting outraged. But it does sometimes make you feel like a shmuck going against it.

[regnis]

This is what you were talking about re the breeders Cup.

These are some Name brand guys.

http://www.drf.com/news/breeders-cup...hallenge-purse

[redietz]

Thanks, guys. Thanks, regnis, for that article. Boy, does that open a real can of worms and questions. Okay, help me out here.

First off, the DRF, which previously ran the Breeder's Cup stuff (I think) now runs contests in direct competition with the Breeder's Cup and such, so would the DRF have highlighted this if they weren't currently a direct competitior? All of this stuff went on when the DRF was in charge, but the DRF didn't bring it up. I realize there was no letter from heavy hitters when it was under the DRF, so maybe that explains it.

Second, these guys in cahoots with an LLC. If that isn't collusion, what is? They have outside investors, is what that means, who finance the thing, and the LLC coordinators take a cut. They may not even be using their own money.

Third, how is it that you're "required" to make x number of plays Day #1, but the one guy didn't but was still eligible? He just took a points loss Day #1? I didn't know that was allowed.

Fourth, if these two guys are running an LLC -- tax question here. If they are collecting money from investors to finance the contest entries, and the live money wagered exceeds the 300-1 reporting/withholding requirement, does that mean that the guys running the LLC get to charge their investors for the taxes? Regnis, would it be possible for the LLC coordinators to actually offset the winnings with losses in other endeavors under the LLC aegis, and in reality pay no taxes while they are charging their investors for the taxes? Could that be done?

I would not play contests like this unless I was pretty sure I was the biggest fish (had the most entries) in the pond.

[regnis]

These guys play enough and win enough that they certainly have good tax advisers, but the IRS does not like any kind of corporate or partnership entity when it comes to gambling. If they are running anything other than the normal deductions for horse racing they are looking for trouble. That being said, if they are running it like a business, their travel and costs for tournament entry fees and racing forms etc. are certainly deductible.

I'm not sure that they have investors. That I would like to know.

I had the same question regarding the failure to make the minimum wagers. Since you don't have to bet every race, they can't just deduct that amount if you fail to bet a race. So what they do is penalize you at the end of the day for each race you didn't bet. But what that allows you to do, is bet it all on 1 race. If you win, the penalty will be deducted end of day. If you lose, didn't matter. But if you have a $3,000 bankroll and have to bet 5 races at at least $600, you can instead bet the whole 3000 late on a race because your bankroll isn't reduced by the penalty until later.

Here are the rules:

"By the end of Friday, November 3, 2017, a minimum of $600 must be bet per race on a minimum of 5 different races held on Friday, November 3rd. Should a player fail to bet the required minimum number of races (5) at the minimum wager amount required ($600) on Friday's card, 1,000 points will be deducted from the player's total score per missed race.
A minimum of $900 must be bet per race on a minimum of 5 different races held on Saturday, November 4th. Should a player fail to bet the required minimum number of races (5) or minimum per race bet total ($900) on Saturday's card, 2,000 points will be deducted from the player’s total score per missed race.
No simulcast races from other venues may be wagered upon within the Tournament, other than those races noted above. There are no caps on payouts. The player with the highest score, (which is calculated by taking player’s total bankroll less any applied penalties) after the Classic on Saturday, November 4th is the Grand Prize winner. If there is a tie between players, the tiebreaker will be the player who won the most money on the final race of the Tournament, which is Classic on Saturday. If there is still a tie, the winner will be determined by the player who wins the most money in the second to last race of the Tournament. And so on. See #9 below."

A couple of years ago, a guy did that at the Keeneland tournament and won. I think they may have changed the rules now but I'm not sure. It should be disqualification rather than a penalty deduction in my opinion. Otherwise, just don't have any minimum wagers and everyone can wait for the last race. Would make a pretty crappy tournament though.