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Old 10-08-2018, 07:35 PM   #1
Track Phantom
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Betting Syndicate

Does anyone know if a horse racing betting syndicate is totally legal?

I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.

Not even sure who to ask.
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Old 10-08-2018, 08:01 PM   #2
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Quote:
Originally Posted by Track Phantom View Post
Does anyone know if a horse racing betting syndicate is totally legal?

I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.

Not even sure who to ask.
Might be some answers in this link. My concern with you collecting the money is the tax impact on you personally.
http://www.ezhorsebetting.com/horse-...ing-syndicate/
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Old 10-08-2018, 10:05 PM   #3
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There was a guy in TX that I had knowledge who was arrested while buying a racing form on the way to LAD. (He was still in TX at the time.)

Seems the authorities had been watching him as a "bookmaker." (He was not a bookmaker; simply asked people at work if anyone wanted to make a bet.)

His crime was that he had taken $80 worth of bets from his friends at work to place for them at the track. He had written down the wagers on pieces of paper that said things like "Bob, $5 win-place, R5 #3."

These papers were called his "betting slips."

No joke. He got off with no prison time but a felony conviction and was barred from TX race tracks for life. It cost him his career as well as a lot of money to stay out of prison.
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Old 10-08-2018, 10:43 PM   #4
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Quote:
Originally Posted by Track Phantom View Post
Does anyone know if a horse racing betting syndicate is totally legal?

I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.

Not even sure who to ask.
Your local DA. Get it in writing
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Old 10-08-2018, 11:13 PM   #5
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Quote:
Originally Posted by Track Phantom View Post
Does anyone know if a horse racing betting syndicate is totally legal?

I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.

Not even sure who to ask.
As the "administrator" of the syndicate, you will be required to file Form W-2G and complete Form 5754 which will show the Irs that you are not the sole winner of the wager. Otherwise you will be liable for tax on the entire winnings. It's also a bit of work and responsibility that you should be compensated for.

From The IRS:

Horse Racing, Dog Racing, Jai Alai, and Other
Wagering Transactions Not Discussed Later


File Form W-2G for every person to whom you pay $600 or more
in gambling winnings if the winnings are at least 300 times the
amount of the wager.


Withholding

If the winner of reportable gambling winnings doesn't provide
a TIN, you must backup withhold at the rate of 24% on any such
winnings that aren't subject to 24% regular gambling
withholding. That is, backup withholding applies if the winnings
are at least $600 but not more than $5,000 and are at least 300
times the wager

https://www.irs.gov/pub/irs-pdf/iw2g.pdf

Use Form 5754, Statement by Person(s) Receiving Gambling
Winnings, to prepare Form W-2G only when the person
receiving gambling winnings subject to reporting or withholding
isn't the actual winner or is a member of a group of two or more
people sharing the winnings, such as by sharing the proceeds of
the same winning ticket.
The payer is required to file Forms
W-2G based on Form 5754

https://www.irs.gov/pub/irs-prior/iw2g--2018.pdf
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Old 10-08-2018, 11:35 PM   #6
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and when you collect, you will get a CTR. This could be tricky if you claim 100k in winnings and the IRS has just been alerted that you just won 4M.

When your partners deposit at the bank, they will get CTRs. They will have to remember to set aside tax $
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Last edited by Robert Fischer; 10-08-2018 at 11:37 PM.
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Old 10-09-2018, 12:46 AM   #7
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Originally Posted by Robert Fischer View Post
and when you collect, you will get a CTR. This could be tricky if you claim 100k in winnings and the IRS has just been alerted that you just won 4M.

When your partners deposit at the bank, they will get CTRs. They will have to remember to set aside tax $
Wouldn't getting paid by check eliminate the requirement for a CTR?
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Old 10-09-2018, 12:53 AM   #8
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Originally Posted by Robert Fischer View Post
and when you collect, you will get a CTR. This could be tricky if you claim 100k in winnings and the IRS has just been alerted that you just won 4M.

When your partners deposit at the bank, they will get CTRs. They will have to remember to set aside tax $

I have a question since I believe you mentioned CTR's in regards to ADW transactions the other day as well - have you ever received one of these? Or is a CTR only kept in bank records & the individual doesn't receive a copy? I ask cause I have yet to see this come into play to my knowledge when using ADWs & transactions in or out of the account.



This is completely hypothetical, but say the leader of the syndicate put in $15,000 of pick 6 bets on their personal ADW & received a total payout of $4,000,000. If they withdrew this money directly from the ADW to their checking account & then wrote out 40 checks of 100k each to all the syndicate members who then went on & deposited this in their bank accounts, I don't see one step in this process that would alert the IRS to this income.



Now obviously skirting your tax bill is not the legal thing to do & I'm NOT suggesting that here, but I'm just saying I don't think the gov't would have knowledge of this until it was self-reported, as is the case for almost all gambling winnings now.
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Old 10-09-2018, 01:21 AM   #9
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Quote:
Originally Posted by SG4 View Post
I have a question since I believe you mentioned CTR's in regards to ADW transactions the other day as well - have you ever received one of these? Or is a CTR only kept in bank records & the individual doesn't receive a copy? I ask cause I have yet to see this come into play to my knowledge when using ADWs & transactions in or out of the account.



This is completely hypothetical, but say the leader of the syndicate put in $15,000 of pick 6 bets on their personal ADW & received a total payout of $4,000,000. If they withdrew this money directly from the ADW to their checking account & then wrote out 40 checks of 100k each to all the syndicate members who then went on & deposited this in their bank accounts, I don't see one step in this process that would alert the IRS to this income.



Now obviously skirting your tax bill is not the legal thing to do & I'm NOT suggesting that here, but I'm just saying I don't think the gov't would have knowledge of this until it was self-reported, as is the case for almost all gambling winnings now.
When I used to get paid from one of my handicapping partnerships, I received a check. At the end of the year I got a 1099 from the organization.

Trust me... they have to send a 1099 or else they are eating all the taxes and are breaking the law.
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Old 10-09-2018, 02:25 AM   #10
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Quote:
Originally Posted by Track Phantom View Post
Does anyone know if a horse racing betting syndicate is totally legal?

I have about 40 people contributing to a bankroll for the Breeders' Cup that we'll be putting in large bets. If we win, I collect the money and pay out everyone their share. I'm just curious if there is anything illegal these days with doing that. Imagine hitting 4,000,000 and having to cut $100,000 checks to 40 people. That could get attention.

Not even sure who to ask.
You might look into the laws in Nevada, I think they legalized Nevada based wagering syndicates a few years ago? Might be of interest if the collective has permanence.
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Old 10-09-2018, 05:41 AM   #11
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Wouldn't getting paid by check eliminate the requirement for a CTR?
nope

you = get a CTR from the track for the $4,000,000 no matter how you ask to get paid (can't see anyone 'cashing' to begin with, but whatever payment option you choose...)

partners= get a CTR once they deposit their check in the bank.

you get a CTR for a 10k or more hit and/or deposit, whether you want cash check or whatever...

CTR is not a cash thing.


-----
as far as the tread starter - the rules, or the template of a successfully run syndicate?... I don't know those...
It's been done before... Have to look up the precedents and stand on their shoulders if you're serious
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Old 10-09-2018, 05:58 AM   #12
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Originally Posted by SG4 View Post
I have a question since I believe you mentioned CTR's in regards to ADW transactions the other day as well - have you ever received one of these? Or is a CTR only kept in bank records & the individual doesn't receive a copy? I ask cause I have yet to see this come into play to my knowledge when using ADWs & transactions in or out of the account.
No you aren't notified.


Quote:
Originally Posted by SG4 View Post
This is completely hypothetical, but say the leader of the syndicate put in $15,000 of pick 6 bets on their personal ADW & received a total payout of $4,000,000. If they withdrew this money directly from the ADW to their checking account & then wrote out 40 checks of 100k each to all the syndicate members who then went on & deposited this in their bank accounts, I don't see one step in this process that would alert the IRS to this income.
leader gets = a CTR for withdrawing to his checking account from ADW.

members = get CTRs for depositing their check.


Currency Transaction Report is not limited to cash transactions. Unless your ADW is some kind of unique offshore situation, at least one (your receiving bank), and possibly both the ADW and Bank may have to write CTR
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Old 10-09-2018, 08:45 AM   #13
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nope

you = get a CTR from the track for the $4,000,000 no matter how you ask to get paid (can't see anyone 'cashing' to begin with, but whatever payment option you choose...)

partners= get a CTR once they deposit their check in the bank.

you get a CTR for a 10k or more hit and/or deposit, whether you want cash check or whatever...

CTR is not a cash thing.


-----
as far as the tread starter - the rules, or the template of a successfully run syndicate?... I don't know those...
It's been done before... Have to look up the precedents and stand on their shoulders if you're serious
I am just not seeing in any literature where a check is considered currency. Since a check can be traced while cash can't be there doesn't seem to be a purpose to include checks.
Attached Files
File Type: pdf CTRPamphlet(1).pdf (156.2 KB, 6 views)

Last edited by AndyC; 10-09-2018 at 08:46 AM.
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Old 10-09-2018, 11:28 AM   #14
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You might look into the laws in Nevada, I think they legalized Nevada based wagering syndicates a few years ago? Might be of interest if the collective has permanence.
Good idea. They were never actually illegal, but the GCB (not to be confused with the Gambler's Book Club) determined that rules were needed for "Betting Hedge Funds."

I actually intervened for a friend/client who got pretty ripped off by one about a decade ago (before there were rules). I was shocked to find that, since there were no rules, the GCB refused to get involved.
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Old 10-09-2018, 12:34 PM   #15
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I am just not seeing in any literature where a check is considered currency. Since a check can be traced while cash can't be there doesn't seem to be a purpose to include checks.
Maybe I'm wrong about that Maybe it's just for cash.

getting outside my circle of competence.

Worth looking into this question and others related to depositing big checks in terms of how they could impact tax and audits.
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