American Pharoah Brings Back the Love For Horse Racing

Horse Racing winnings in 2015The world fell in love with American horse racing again in 2015. American Pharoah’s sweep of the Triple Crown—the first since 1978—was selected as 2015’s sports story of the year.1 With all eyes back on American horse racing, it’s important for Canadians and other non-U.S. residents who bet on races while visiting the U.S. to know that their winnings are subject to a 30% withholding tax by the IRS.

American Pharoah is 2015 Sports Story of the Year

Who was the biggest sports celebrity in the U.S. in 2015? The answer is American Pharoah. After years of declining interest in horse racing, American Pharoah’s win in the Kentucky Derby, Preakness, and Belmont Stakes cemented it as the sports story of the year in 2015.

Ending the longest drought in sports history, American Pharoah claimed the Triple Crown 37 years after Affirmed last did it in 1978. Over the ensuing years, 13 horses had won the Kentucky Derby and Preakness, only to lose at the Belmont Stakes.

The horse won the Kentucky Derby in a tight finish, won the Preakness Stakes by seven lengths, and claimed the Triple Crown with a 5 ½-length win at the Belmont Stakes2.

American Pharoah didn’t stop there though. The horse went on to win the $5 million Breeders’ Cup Classic. With that victory, American Pharoah became the first “grand slam” winner in horse racing, after which the three-year old retired.

A Year of Record Betting

A world-wide celebrity, American Pharoah drew tens of thousands out to his races. Dubbed the American Pharoah Effect, he filled grandstands to capacity, increased television ratings, and created excitement about the future of horse racing.

The American Pharoah Effect also saw an increase in the number of fans betting at the window. In 2015, the Kentucky Derby welcomed a record 170,513 people. The 141st running of the Kentucky Derby also set a record for betting: $194.3 million, a 4% increase over the 2012 record of $187.0 million.3

Two weeks later, wagering and attendance records were broken at the Preakness Stakes. Over 131,600 horse-racing fans attended the Preakness—a 6.5% increase over 2014’s attendance of 123,469. The Pimlico Race Course also set a new record for of $85.1 million for total Preakness Day handle.4

Not surprisingly, the American Pharoah Effect resulted in a huge day of wagering at Belmont Park. According to the New York Racing Association, the Belmont Stakes reported $134.8 million was wagered on the day of American Pharoah’s race. More than $16.8 million went to on-track wagering and more than $1117.9 million was the total of off-track betting.5

The American Pharoah Effect spilled over the Triple Crown. The Haskell Invitation, which took place in August, attracted the biggest crowd in the history of Monmouth Park, with $6.54 million bet on race day. The total handle for the day’s race card was up 13.4% over the previous record (set in 2008) at over $20 million.6

The number of attendees at the Travers Stake at Saratoga (an American Grade I Thoroughbred horse race) was approximately 50,000, but the total amount of money wagered on the 13-race card was a record of over $49 million—a 24.5% increase over the amount wagered in 2014.

Many expect the American Pharoah Effect to positively impact the 2016 horse racing season.

Pari-Mutuel Betting

Unlike a casino where you place a wager on the house, pari-mutuel betting means that the track only holds the money that has been wagered until the end of the race and then pays the ticket holders. The track has no interest in which horse wins or loses the race

With pari-mutuel wagering (betting on sports in which participants finish in a ranked order, such as horse racing, dog racing, and jai alai) you bet against all of the other players wagering on the same event.

Under the pari-mutuel system, the odds continue to change as more and more people place bets. When the race actually begins, the odds could very easily be much higher or lower than the odds posted when you made your bet.

U.S. Lottery Winnings Subject to 30% Withholding Tax

If you are a non-U.S. resident and win a significant amount of money at a casino, a gaming tournaments, on pari-mutuel wagering, on keno, by playing the lottery, or on a game show, your winnings could be subject to a 30% withholding tax. But, if you live in a country like Canada, which has signed a U.S. tax treaty, you may be eligible for a refund.

Some of the countries that do not have a U.S. tax treaty, but may still be eligible for a refund include: Australia, Bahrain, Barbados, Brazil, China, India, Indonesia, Israel, Kuwait, Mexico, Malaysia, Monaco, New Zealand, Norway, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, and the U.A.E. However, based on a recent court case, winners from these countries may qualify for a refund if they meet certain criteria.

If you win a substantial amount gambling (typically over $1,200), your winnings are subject to a 30% withholding tax by the IRS. If you win $3,000 playing the slots, the casino will pay you $2,400. The IRS keeps the rest.

RMS is the Easiest, Fastest Way to Get Your Money Back

If you’ve been to the U.S. and had 30% of your winnings held back by the IRS, Refund Management Services (RMS) can help you reclaim a portion or all of your taxable winnings.

Founded by a Canadian Chartered Accountant in 1998, RMS is the most reliable and experienced gaming and casino tax refund provider for non-U.S. residents. Only RMS has the One Simple StepTM process. Our customer service agents take care of the rest.

Once you provide us with complete documentation, your claim will be processed and we will submit it to the IRS. We’ve never been refused for an eligible refund. Contact us today by calling our toll-free number at 1-888-272-5559 or by emailing us at [email protected]!

Sources:

1.Cohen, R., “American Pharoah’s Triple Crown victory voted 2015 AP sports story of the year,” U.S. News, December 24, 2015; http://www.usnews.com/news/sports/articles/2015-12-24/american-pharoahs-triple-crown-is-ap-sports-story-of-year.
2.“American Pharaoh,” Wikipedia, The Free Encyclopedia, December 24, 2015; https://en.wikipedia.org/wiki/American_Pharoah#2015_Kentucky_Derby
3.Seward, J., “2015 Kentucky Derby Sets Attendance, Betting Records,” Yahoo! Finance, May 4, 2015; http://finance.yahoo.com/news/2015-kentucky-derby-sets-attendance-003233404.html.
4.Lintner, J., “Record attendance, handle on Preakness Day,” The Courier-Journal. web site, May 16, 2015; www.courier-journal.com/story/sports/horses/triple/preakness/2015/05/16/preakness-2015–record-attendance-handle–pimlico–saturday/27465555/.
5.Sargeant, K., “How much money was bet on Belmont Stakes?” NJ.com, June 8, 2015; http://www.nj.com/horse-racing/index.ssf/2015/06/how_much_money_was_bet_on_belmont_stakes_american_pharoah.html.
6.Steinberg, L., “Predicting the Longevity of the ‘American Pharoah Effect’ on Horse Racing,” Forbes web site, September 22, 2015; http://www.forbes.com/sites/leighsteinberg/2015/09/22/predicting-the-longevity-of-the-american-pharoah-effect-on-horse-racing/.

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