NTRA Lobbyist Delivers Optimistic Update

SARATOGA SPRINGS, New York–During his presentation at the NTRA's legislative briefing in Saratoga Thursday, lobbyist Greg Means delivered optimistic, though not concrete news on federal issues facing horse racing. Means said a threat to internet wagering supported by Las Vegas casino owner Sheldon Adelson would not pass Congress this year and that his Alpine Group is working to extend the uniform depreciation of race horses and have the Department of Treasury update the way it looks at wagers.

The Adelson-backed Restoration of America's Wire Act would prohibit on-line wagering. The original Wire Act was passed in 1961 to go after illegal bookmaking. Racing has been able to use the internet through a 2000 amendment to the Interstate Horse Racing Act.

“Sheldon Adelson has decided that he is morally opposed to internet gambling,” Means said. “It's OK to come into the Sands and bet, but betting on-line is morally reprehensible.”

Means said that parimutel racing had been excluded from the first draft of the bill, but the version that was introduced was not acceptable to the industry. He said the bill will not pass during this election year, but that the issue won't go away.

“They probably will try again and we'll push back again. I've seen this movie. I think I know how it ends,” he said. “It's still an issue and it's going to be an issue again next year because Mr. Adelson has a stack of money bigger than most stacks of money, and his morals are not going to change between now and January. That's an issue out there that we're perpetually involved in and perpetually just neck-deep in all negotiations that go on.”

Uniform depreciation and the wagering question are important tax issues. Means said that depreciation regulation, like many other tax provisions, will expire at the end of the year and will have to be address in a post-election lame-duck session of Congress.

“The goal is to get those renewed or extended in December in a lame duck,” he said. “The problem with a lame duck is we're not going to have a feel for the lame duck until after the election of who's in charge. In addition, there are some of these tax provisions that impact solar energy and other things things that Republicans really don't like.” Still, Means termed it “a small-cost item” and said he expected it to be renewed.

The NTRA has been lobbying the federal government about its antiquated taxing and withholding rules. The standards were put in place when there were few and very basic exotic bets and are not appropriate in the age of multi-horse and multi-race wagers. Means said the original approach would require changes in tax law, but noted that Congress is not passing tax bills.

“We decided we've got to skin this cat another way,” he said. “We decided to go to the IRS and Department of Treasury and see if they would redefine the definition of a bet or a wager.”

The IRS still uses $1 as the base bet and any return of or over $602–300-1–requires a visit to the tax window. Means used what he called his favorite wager, a $1, five-horse trifecta bet, to illustrate his point, noting that he invested far more than $1.

“What we are pushing for is to change the definition of a bet or a wager to calculate that based on my total amount wagered into that pool,” he said. “If I have a $60 trifecta bet, the cost of my wager is $60. It's not $1. Treasury can make that change from a regulatory perspective. We don't have to change the law to do that. This rule was put in in the 1970s. The only exotic wager in 1970 was the daily double. Welcome to the land of Pick 4s, Pick 6s, trifectas, supers, Hi-5s. The world has changed. It was 40 or 50 years ago that we made this rule. Modernize this rule, IRS.”

A campaign to support the proposed rule change drew more than 11,000 letters, calls and email of support during the comment period. In addition, Means said House and Senate appropriation bills contained language urging the Department of Treasury to swiftly modernize its withholding rules.

“We're waiting,” Means said. “That's painful for me and for you. We're trying to get Treasury to move this reg, and finalize it and approve it along the lines of what we're talking about on the redefinition of a bet or a wager. We're continuing to have letters, phone calls, staff working on IRS and Treasury to try to get them to move this rule.”

Means said the drive toward the finish line is ongoing and reminded his audience that patience is important when dealing with the federal government.

“I had hoped we would have more definitive news on this by now, but we don't,” he said. “We're trying to push them along to approve this rule, which would be a huge benefit to the industry. We've been focused on that the last year and a half. Nothing happens fast in Washington, but we're making progress.”