A horseplayer went to the track every day and bet $2, usually losing. One day he won his bet in the first race and bet all the winnings on a horse in the second race. He won that one too. He kept this up until by the last race he had won over $10,000. He bet it all on a horse in the last race that lost in a close photo finish. When he got home that day his wife asked how he did and he replied "Same old story, I lost the two bucks".This old joke has long been used to illustrate the easy come, easy go attitude of the horseplayer but the provisions of Senate bill S.972 could make this a horror story instead of a joke. Senator Reed of Rhode Island has introduced a bill to eliminate the gambling loss deduction which could be the final blow that kills horse racing as an industry.
If this bill gets passed, the ending of the joke would have to be rewritten:
When he got home that day his wife asked how he did and he replied "Same old story, I lost the two bucks. Oh, by the way we owe the government $3,000."Not so funny anymore.
If passed, this bill would put the big time gamblers out of business or at
least send them to other countries since there is no way they could stay in business if
they are taxed on their gross profits instead of their net profits. No other business
is taxed on gross profit instead of net, including businesses that are very similar to
gambling like playing the stock market or dealing in collectibles.
With the big gamblers out of the picture the revenue for the tracks would plummet since the $2 bettors alone can't keep them afloat. Even many of the $2 bettors might shy away from betting if they know they will get hit with a big tax bill if they get lucky. If the tracks go under so do many of the associated industries like concessions, local motels and restaurants, places that supply the horsemen at the track, and ultimately the farms who breed the horses. This would create a massive loss of jobs and tax dollars.
Currently this bill is in the Senate Committee on Finance. It was introduced by Senator Reed on June 26th and was co-sponsored by Senators Chafee (RI), Coats (IN), and Inhofe (OK). Below are links to their e-mail and web pages as well as the e-mail for all the other online Senators. Please take a minute to write or e-mail them as well as your own Senator to express your concerns about this bill and it's possible effects on the racing industry.
- Full text of the bill includes links to the all the information about it such as current status and all action taken so far
- Senator Reed's introductory remarks you have to scroll down to the third entry from the bottom "REPEAL THE GAMBLING LOSS TAX DEDUCTION", you really should read this one (uses temporary search directories so I can't link direct)
- All the Senators' e-mail addresses
- Senator Reed's web page
- Senator Chaffee's web page
- Senator Coats' web page
- Senator Inahofe's web page
- Andy Beyer's column on the subject gives a very good analysis of the fallacies of this bill.
- Horseplayer's Market article by Scott Little & Walter Parker. Includes a suggested letter to send to your Senator.
- AP story short but makes a couple of good points
- Current IRS rules on gambling income and withholding
- Current IRS rules on gambling deductions you really should read this one as there are some requirements for record keeping that you may not know about
![[form W2-G]](http://z.about.com/d/horseracing/1/0/A/1/w2g.gif)
Uncle Sam taking bets graphic created by Jacci our Desk Top Publishing guide.
