So you Picked California Chrome to be the 140th winner of the Kentucky Derby, and you collected your winnings. (While California Chrome’s owners collected over $1.4 million.) But do you really understand how wagering works in horse racing?
“Tax Dood” Brad Polizzano gave us some insight into what happens to your bet once it’s laid on the line. And if you’re not familiar with how playing the ponies works, it’s a lot different than your favorite online casino games or picking the over/under at a Vegas sports book.
Here’s what he told us:
- The U.S. wagering system for horse racing is parimutuel betting. The wagers are pooled together, the house take is removed, and then the payoff odds for each wager are calculated based on the amount wagered for each outcome.
- Putting their lives at risk each time the starting buzzer sounds, jockeys aren’t paid very well on the biggest of horse racing stages: the first place jockey scores 10% of the horse’s winnings, while second and third place jockeys each get 5%.
- Winnings are subject to tax – the payor is required to report a U.S. bettor’s winnings to the Internal Revenue Service if the winnings are $600 or more and the winnings are at least 300 times the amount of the wager. If your winnings are more than $5,000, you’re going to have to pony up 25% to the IRS.
So that longshot that came in may pay your mortgage for a couple of months… but Uncle Sam is coming for his cut.
For more on what Polizzano had to say about Kentucky Derby betting, check out the rest of his article.