NTRA Staying Busy in Washington

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While the Triple Crown races are approaching beginning with the Kentucky Derby Presented by Yum! Brands (G1) in Louisville, Ky., the National Thoroughbred Racing Association continues a busy stretch in Washington putting the industry's message forward on immigration and tax issues.

The political mood on immigration issues may be too steep a challenge for horse racing and other industries that want additional seasonal workers through the H-2B visa program. Supporters of the H-2B program hope a potential provision to the federal budget will allow workers who previously worked in the program to return to the U.S. and not be counted against a 66,000 yearly cap.

A short-term spending bill was reached April 28 that effectively delays the final budget to May 5. Still that added time may not improve the chances of the H-2B exemption for returning workers. Earlier this month NTRA president Alex Waldrop noted it appears to be an uphill battle.

"The reality is that these legislative fixes are very difficult to pass because of the environment in Washington, D.C., today," Waldrop said. "There is a great deal of pushback against anything perceived as a loophole to allow foreign workers into the U.S. We make the case that many of these jobs go unfilled because U.S. workers don't want them, but that has not won the day so far."

In 2016 Congress failed to renew the "returning worker exemption" that permits workers from the previous three years with clean records to enter the country again without counting against the 66,000 cap. That exemption effectively raised the number of workers under H-2B from 66,000 to approximately 190,000. The most recent cap was reached in just 10 days this year, with 33,000 visas granted out of some 90,000 applications.

On another front, efforts are ongoing to have the Department of Treasury change its rules on pari-mutuel winnings in order to acknowledge the 300-1 threshold should be based on total ticket cost before reporting and withholding requirements kick in. Waldrop said the NTRA is awaiting the change to take effect and hopes to have the industry ready to quickly adjust. The NTRA has not seen any change in opinion on the proposal, but believes personnel changes and unfilled positions in the Treasury have slowed the process.

On Dec. 29 the Department of Treasury and Internal Revenue Service issued the proposed regulation changes on reporting and withholding, beginning a 90-day comment period that ended in late March. On April 17, 12 members of Congress from a number of key racing states signed a letter delivered to the Department of Treasury requesting that recently proposed IRS regulations relating to the way pari-mutuel winnings are calculated for tax withholding and reporting purposes be finalized as soon as possible.

And on one other topic, President Donald Trump's tax reform proposal that would eliminate most itemized deductions, including gambling losses, certainly would impact the industry. Of course President Trump's proposal is just the beginning of a long process, but the NTRA is monitoring.

Considering President Trump's proposal was about a page long and some considered it a "wish list," many changes will be on the horizon. Still, if Trump's "wish" were to come true, it certainly would impact an industry that counts on core players for much of its handle. 

Currently bettors are allowed to claim gambling losses against their winnings. A player who reports $12,000 in winnings, can also claim his losses up to that amount in deductions. If the ability to claim losses were eliminated, that full $12,000 in winnings would become taxable income. There also has been some talk of allowing a certain amount of winnings to not have to be counted, but even with that, eliminating the deduction would still impact big bettors.

"We're on top of it, but we don't think there's a realistic concern at this point," Waldrop said.

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