Between takeout and taxes, it's hard enough to beat this game. As horseplayers, we certainly don't need states sticking their hands deeper into the till – so deep that we are discouraged from placing a $20 win bet.
But that's exactly what Massachusetts is doing. As a result of recent tax law changes, any winnings of $600 or more are subject to an additional 5% withholding by the Commonwealth. That's right – any winnings, whether it's a $1 trifecta that pays 600-1, a $100 place bet that pays 6-1 or a $20 win wager on a 30-1 longshot. The tax will be withheld immediately.
It's bad enough that exotic wagers producing $600 in winnings at 300-1 or higher face extra taxation by the federal government, but horseplayers have gotten used to the increased tax levels on exotic wagers and have adjusted accordingly. Same goes for the automatic federal withholding on winnings of $5,000 or more. That's a standard that exists across the gambling industry and allows for considerable flexibility in wagering. But a state soaking gamblers an extra 5% on all transactions that produce $600 in winnings is beyond egregious. And for a game in such a fragile state already, it could be a killer in Massachusetts.
In a letter to Suffolk Downs Chief Operating Officer Chip Tuttle, lifelong horseplayer Paul Braverman describes the reaction to the new law when it was first implemented at Plainridge Racecourse May 25:
As soon as the patrons found out about it they hit the roof. Half of them said they wouldn't be back and were either going to Rockingham in NH or Twin Rivers in RI. The other half figured out immediately how to circumvent the law by reducing their (wagers) to small denominations that would fall below $600 payoffs. The other half will be savvy enough to elude the tax…
I come to Suffolk Downs because I appreciate the racing there and for 48 years they have treated me very well. However, I refuse to give money away for nothing when other states you compete with offer superior payouts and zero tax hassles.
For its part, Suffolk Downs recognizes the horrible precedent that exists here. The track is including the following information in its racing programs:
We are working toward a more reasonable standard for state withholding on gambling winnings. If you are interested in supporting that effort, we are happy to take your name and contact information so that we can ask for you support in lobbying the state legislature on this issue. You can do this by calling our Customer Service line at 617-568-3263 or by sending an email to email@example.com.
In addition to the 5% withholding, Massachusetts has also lowered the minimum payout on all $2 winning bets at racetracks from $2.20 to $2.10. These new rules also apply to wagers placed with Advance Deposit Wagering (ADW) sites, such as TVG, Xpressbet, and Twinspires.
The new withholding requirement is reminiscent of the 5-6% surcharge levied on wagers taken at New York City OTB's. We all know how that story ended. There is no NYC OTB system anymore.
In Massachusetts, it's not that horseplayers are being singled out. The 5% applies to all winning tickets of $600 or more. They could be lottery slips, slot machine winners, or even raffle tickets. But those games are unlikely to be affected in the same fashion as horse racing because people who are regular horseplayers are sensitive to even subtle changes in “the rake.” As Braverman pointed out, horseplayers at Plainridge were incensed on day one. It's hard not to notice when an extra $30 or more comes out of a win bet. Even casual players are likely to do a double take when their 20-1 longshot doesn't pay 20-1.
Sure, there are ways around it. A player who wants to bet $200 to win on a 3-1 favorite can just place two $100 win wagers instead. But that's really beside the point. This is a continuation of the Machiavellian “partnership” between states and the racing industry, where states taketh away what they have previously given, simply because an industry supported by gambling, no matter how legitimate or important it might be to the economy, is an easy target. But it's also a dangerous game to keep nipping away at a business that provides you income.
Massachusetts legislators might want to whip out their maps. It doesn't take long to drive out of Massachusetts from anywhere in the Commonwealth. Suffolk Downs is right to pounce on this and try to smother it, and horseplayers should lend their support to the fight. We've seen how slippery the slope can be in this game. Just ask the racing industries in states with no casino-boosted purses. Trainers and owners vote with their feet and cross state borders to places where they have a better chance of making a living.
Horseplayers, fed up with years of overtaxation and disrespect as customers, will do the same in this case. The likely result is that the greed of Massachusetts lawmakers will backfire, and they'll find that when they go to count the money in their racing till, there won't be nearly as much of it.
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