With New Withholding Rules in Place, Wagering Rises 6.39% in November

According to Equibase, total all-sources wagering on U.S. races was $890,823,840 in November, a 6.39% increase from the same month in 2016.

The increase coincides with the IRS changing the way withholdings were computed on bets paying off at odds of 300-1 or more.

Previously, any winning ticket paying in excess of 300-1 was considered a single bet. The IRS did not take into account how much the player actually bet on his or her total wager. For instance, if someone bet $90 on a trifecta box and held one winning trifecta ticket worth $900, their actual winnings were at odds of 10-1. Thanks to a prolonged lobbying effort by the NTRA, the IRS announced in late September that it had changed regulations to take into account the total amount wagered.

With some tote companies moving more quickly than others to write the new regulations into their software, November was the first full month where America's horseplayers were receiving the benefit of the new withholding regulations, which was certain to put more money back into their pockets.

“The Equibase report of significant gains in wagering for the month of November correlates with reports of a 90%-95% reduction in the number of W-2G filings for the same period,” said NTRA President and CEO Alex Waldrop. “Whether the new tax reporting and withholding requirements are directly responsible for the increase in handle remains to be seen but, clearly horseplayers are keeping more of their winnings and reporting far less to the IRS.”

While there's no certainty that the IRS' move was the sole reason for the handle increase, there doesn't appear to be any other obvious factors that would account for such a healthy jump in handle. The Breeders' Cup was held in November during both years and both months consisted of four, and not five, weekends. Average field size in November, 2017 was 8.25, almost identical to the November 2016 figure of 8.29.

The Breeders' Cup itself was one of the first litmus tests for how the IRS changes might affect total handle. Despite a slew of longshot winners, only 35 winning tickets sold at Del Mar Thoroughbred Club triggered Internal Revenue Service reporting or withholding via automatic W-2G filings across the two-day Breeders' Cup World Championships. The previous year, there were 1,333 W-2G filings that occurred on-track at the host site.

Breeders' Cup wagering on track was up 21.4% this year.

Should the 6.39% increase in November prove to be a true gauge of how the new withholding rules have affected handle, the annual increase would be about $688 million.