Horseplayers Irate Over New Massachusetts Gambling Tax

by | 06.03.2013 | 3:42pm

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 protected]

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.

  • 4Bellwether666

    “Thirty Tons A Day”…KMA…

  • MSD

    This is absolutely ridiculous. Suffolk Downs must be concerned. The handle for that track is gonna be brutal.

    • Jef

      The Suffolk handle is already brutal. There is very little room for it to drop before it hits zero.

      • MSD

        Very good point! True that.

  • Richard C

    Career politicians love the smell of free money so much….they will pass legislation for more and more and more.

  • Bman

    Suffolk Mgmt,

    Can you please provide the name(s) of the legislative leaders who enacted this and can you provide their numbers at the state house?

  • Roger

    Massachsetts crooked legislature is simply telling horseplayers – find a local bookie and you won’t face that extra tax and if you’re that upset…just go gamble at any of our Indian Tribe or Private casino’s and play different games and not be subject to similiar 5% horseracing tax.

  • BombsawayBob Grant

    Mass. Law currently doesn’t allow you to declare losses against
    certain gambling winnings (W2G’s), so they take a cut out of every
    bet,another 5% on top of $600 Wins, & you can’t get a dime back, even
    if you’ve had a net loss on your total bets at the end of the year. INSANE!

    • brussellky

      It is insane but state taxes, in general, in the Northeast are insane. I guess that is the price one pays to get to live in a liberal utopia.

  • MLB

    The employees at ‘Suffering Downs’ should check where the local unemployment office is located.

    • Bman

      It’s in Chelsea at Steve Wynn’s new casino, where they don’t have to give up 9% to nickel claimers running for $12K IF they get the license at SD.

  • Hi Scott. I was wondering if you knew this was tried before in a neighboring state? The geniuses in NH put an automatic ten percent tax on winnings WITH NO OFFSET FOR LOSSES. This lasted for about a year while the obvious consequences played out including the closing to the “The Lodge” on Route 106 and the consequent loss of 23 good paying, year around jobs. In addition, the investors had over 1.3 mil. invested in renovations on the property. The players weren’t going to stand for it. This is why we can’t have idiot politicians running anything other than the dog pound.

    • Scott Jagow

      I didn’t know about that, Christopher. Thanks for the background and additional info.

  • Andrew A.

    The sport is dying because of stuff like this.

  • Jeff

    They haven’t even decided where the casinos will be built yet and they are already looking for a bigger cut. Mass politics…..

  • salthebarber

    This is a total disaster. Wait until the casino bidders find out it applies to slots. It’s obvious that the legislators were asleep on this one. But, what is the excuse for Speaker Deleo whose father worked at Suffolk?

  • disqus_jHEXYNk5zi

    Does Louisana do the same? I remember a few years ago my gf and I went for a stay at Harrah’s New Orleans and every slot jackpot she hit they took State Tax out. If you filed a LA tax return at the end of the year, you stood to get some back, but they’re making a mint off of the average traveler who doesn’t file an out of state return. We did make a trip out to the Fair Grounds but no hits big enough to take a hit. Just wondering if the setup is essentially the same as they are now doing in Mass.?

    • Don Reed

      Boston is definitely a prime destination for tourists, but Suffolk Downs would be the least likely destination for these people coming to the Bay State. The Lizzie Borden museum probably has a bigger handle (no pun intended).

      • I agree, only die hard racing fans would be likely to visit. And not many of them.

  • jttf

    bridge jumpers make a huge bet and win. or do they ? they have to give back the 5 % they just won. does that make any sense ? is there any paper work to fill out ? what a pain. this is against the geneva convention.

  • Tinky

    What’s everyone so upset about? The racing industry has already shot off all of its toes, so there aren’t any more to lose!

  • jack

    Looks like Scott is censoring anything negative towards Suffolk.Let’s not be honest.

    • And that’s based on what? I haven’t censored anything.

      • Don Reed

        Agreed. Ridiculous assertion.

  • Don Reed

    They’re off, you won! No – wait – you lost.

  • brussellky

    How could anyone be surprised something like this would occur in the People’s Republic of Taxachusetts?

  • harry

    What a joke!!! Once again nobody and I mean nobody respects the FANS in horse racing any more not that they ever did. This is a disgrace to Massachusetts horse racing and for me boycott time!!! Government taking over and ruining a sport we all love horse racing. Well I just eliminated Suffolk and Plainridge from my betting menu. Where is HANA they wanted boycott California wagering because of high takeout where are they on this mess. So far Quiet!!! Time for all Massachusetts residents to “kick bums out of office”. If you win you lose!!! Very sad for all forms of gambling in Massachusetts.

  • Lived there for 40 years. There is a reason it’s called Taxachusetts.

  • kyle

    The real idiotic aspect to this is how it will effect their coming casino business. It might be a pain but it’s pretty easy to get around at the track and the small Suffolk pools mitigate things even further – large bets are difficult to make in the first place. I know its politicians and nothing should surprise, but I believe Mass. has some of the lowest lottery takeout rates. Thought they got it somewhat, I guess the lottery thing was a case of a broken clock.

    • kyle

      Duh. There is no getting around super-exotic payouts . Who will play them in Mass. any longer?

  • Mitch

    Yes, Ray, this latest legislative genius is mind-boggling. I’m beginning to lean towards the thought that the rulemakers are people who think all gamblers are degenerates and most will continue playing, no matter what government throws at them. I can’t think of another explanation other than stupidity, and clearly that would never apply to a politican.

  • jack

    [email protected].–Will not accept!

  • salthebarber

    The new tax withholding rules in Massachusetts appear to be part of the casino bill passed in 2011. It came into effect this year. It appears to me to be a poison pill that will have to be dealt with when the casinos get licensed. In the meantime, horseracing will be the victim. Maybe, the casinos prefer it to happen this way.

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