New IRS Tax Regulations - Effective Sept 28, 2017

The previous IRS thresholds remain the same:

What's different?

The old rule used the winning combination base bet to calculate the 300-1 threshold.

Example with Old Rule: $1 Trifecta Box 1-2-3-4, Total Ticket Cost = $24

Base for calculating the 300-1 threshold is $1 (the amount of the winning base bet).

IRS Threshold is $301 (300 x 1 + 1)

  1. Suppose the $1 Trifecta payout is $900. This is IRS reportable. The guest receives $900 in winnings.
  2. Suppose the $1 Trifecta payout is $6,000. This is IRS automatic withholding of $1,500 leaving the customer with $4,500 in winnings.

The new rule effective 9/28/17

Example with New Rule: $1 Trifecta Box 1-2-3-4, Total Ticket Cost = $24

Base for calculating the 300-1 threshold is $24 (the amount of the total cost of the ticket).

IRS Threshold is $7,224 (300 x 24 + 24)

  1. Suppose the $1 Trifecta payout is $900. This would NOT be IRS reportable. Customer receives $900 in winnings.
  2. Suppose the $1 Trifecta payout is $6,000. This would NOT be IRS reporting or withholding. Customer receives $6,000 in winnings.
  3. Suppose the $1 Trifecta payout is $8,000. This would be IRS withholding as it is over 300-1 threshold ($7,224). Customer receives $6,006 in winnings. Automatic withhoding of $2,000.
    1. Payout - Cost of Bet = Net Winnings ($8,000 - $24 = $7,976)
    2. New Winnings x Witholding - Withholding Amount ($7,976 x 24% = $1,914)
    3. Payout - Withholding AMount = Amount to Customer ($8,000 - $1,994 = $6006)