Push 1 for Slots, Push 2 for Drug Bans..

Tweet I read the Prescription for Racing, a 37 page full color report, this past weekend. It is quite the document, I just can't figure out why they hid it in the Thoroughbred Daily News and make you sign up for a free 2 week subscription to obtain it. This is a document that should be front and center, if they are serious about it, not buried like it is now. I'm surprised it's getting very little mention other than in a few blog sites. The doc talks about a commissioner's office, takeout, number of tracks in use, illegal drugs, the effect of slots, etc. etc. It's interesting reading and contains some well-known names in the racing business like NTRA prexy Waldrop, NYRA prez Hayward, DRF's Crist, and Keeneland's Nicholson to name a few. I encourage you to check it out and read it cover to cover.

Not much racing on my calendar this past weekend due to being on the party circuit. Dinner party Friday night with the Space Gal's crew (the Space Smo's) where I did my best Eli Kirshstein impression with a shrimp remoulade appetizer to kill for (so I'm told). Saturday included blogging for the NTRA with my latest post on the BC Dirt Mile, topped off with a black tie gala in the Falls. Sunday included a lax tourney that my nephew from the 'Cuse was in town showing off his solid bloodlines and leaving it all on the field. We won't mention the Bills game which ended a very long weekend on a dour note.

The one race I did catch was that of Prince Dubai (who drifted up to 50-1) before donning the monkey suit, who was in a turf race at Belmont. While he finished fifth in the race, he had a troubled early trip, as he was checked sharply at the start, his jock lost the irons, but finished very (and I mean very) strong in the stretch only 2 lengths out ahead of last time out winner Tobruk. The Prince won his last out for Bona Venture Stables, and we'll keep an eye on this one who should get a better trip next time out.

Don't forget to check out the Rx for Racing transcript, you can dial up whatever topic you like....

My Top Five Cappin' Books

Tweet It's about that time where I pull out my Betting the Kentucky Derby book to refresh myself in some of the betting ideosyncracies that are aligned with the Derby. Last year I started a spreadsheet on each of the horses in the starting gate and various statistics outlined in the book. It helped me hit the Big Brown-Eight Belles exacta ($154.50) and I think I'll probably be putting it together again this spring.

So while we're on the topic of racing books here are my Top Five favorite books that have helped me understand some of the finer points of handicapping:

1 - Exotic Betting by Steven Crist. In my humble opinion, the best of the best. His chapters on multirace betting are legendary and his ABC system for these wagers has proven profitable for Mr. Crist, especially in the past year if you've been following his blog. Aside from the multirace techniques his wagering strategies to maximize bankroll in exacta and trifecta betting was most valuable to me. I've read this book over and over to refresh myself when I fall back into some of my bad betting habits.

2 - Bet with the Best 2: Longshots by various authors. This book has a number of chapters by various different racing authors. My favorite chapters are by Steve Davidowitz on Trainer and Track Specific Angles, Tom Brohamer on the Turn Back Play and finally Laurn Stich on Hidden Turf Angles and Sires. I read this book over the summer and learned a lot from a wide array of turf writers.

3 - Betting the Kentucky Derby by Dean Keppler. For the reasons stated above. Interesting chapters on how preps, pedigree, beyer speed figures and post positions have historically figured into the puzzle that is selecting the Derby champ.

4 - Betting Synthetic Surfaces by Bill Finley. His statistical analysis on synthetic tracks helped inspire me to do my own study prior to the Breeders Cup on the Oak Tree meet preceding the big weekend. Interesting chapters on the Dirt to Synth and Turf to Synth angles as well as some analysis of the top sires for synthetic runners has been extremely helpful when handicapping the fake stuff.

5 - Expert Handicapping by Dave Litfin. I really enjoyed this NY-based writer's book, which is another one I read again from time to time to sharpen my skills. He introduced me on how to read Tomlinson figures and how to properly evaluate a favorite for vulnerability. An excellent read with real life examples.

While these are just a few of the numerous excellent books on the topic, here are a few more in my library that earn an honorable mention (HM):

HM - Handicapping Contest Handbook by Noel Michaels. The must read chapter for any handicapping contestant is on strategy, and it is a good one. This book has some value to purchase and while most of it is common sense it definitely helped me when I attended my first real-time contest in Vegas. Unfortunately for me I didn't follow the strategy...

HM - Handicapping 101 by Brad Free. A must read for the novice handicapper. Aptly named, it has a thorough discussion of the four tenets of handicapping - form, class, speed and pace highlight a book steeped with real life examples of how to read past performances. The second book I ever read on the topic.

HM - Six Secrets of Successful Bettors by Scartoni and Fornatale. The authors interviewed more than two dozen professional players and identified six secrets that all of these successful players have in common. Beyer, Free, Crist, Davidowitz, Friedman, Serling and several anonymous pros are all featured in this engaging book. Best chapter: The Never-Ending Quest for Value (Secret: They only bet when they have an edge.)

HM - Speed to Spare by Joe Cardello. Read this one over the summer and picked up a few tips on identifying Beyer Tops, Beyer Bouncers and Patterns and Cycles when evaluating the ever present speed figs.

HM - Betting on Horse Racing (for Dummies) by Richard Eng. I'd be remiss if I didn't mention the first book I ever read on betting the ponies. For the first time bettor or track goer, it handles all the basics with ease. While the Saratoga Resident gave me my first lesson during the summer of 2004 on the fly, I picked this one up shortly after my first foray to better understand the game.

I'm sure I've missed a few good ones, let me know where I missed the boat....

[Update: I put up a poll on the left hand column based on the comments received..please let me know your thoughts!]

Third is a Charm

Tweet Since we're closing in on tax season (in my real world anyways), today's post was inspired by an email from one of my partners regarding a journal of taxation blast out to members firms titled "Better to Be a Third Place Winner." The IRS issues related to reporting withholdings on racing winnings is well chronicled (especially by Steven Crist) so I thought this article was semi-relevant, and it is quite entertaining (albeit lengthy).

Here is the main body of the article (courtesy WG&L):

"Most of us probably have day-dreamed about winning a large lottery prize or a mega-payoff in Las Vegas (or the local casino of your choice). Your editors are aware of two situations—30 years apart—where being the third place winner in a big stakes event would prove to be far better off—tax wise—than being the number one winner.
Flash back to the mid-1970s: A law school classmate of ours, who had taken up practice a few hundred miles away in a small town, called us out of the blue with a tax problem. He told us his client was a milkman who had a rural route and had last filed an income tax return in the 1940s. He somehow missed timely filing the following year, and rather than file late, he didn't file—and never filed again.

The milkman happened to purchase a ticket in the Irish Sweepstakes, which was a forerunner of the multistate lotteries common today. Lo and behold, the milkman won the Sweepstakes and along with it, a $125,000 prize (which, adjusted for inflation, would have looked like a gazillion bucks in today's dollars to the milkman). The check arrived, and the milkman cashed it.

Unfortunately, the milkman's identity was published in his local newspaper (without his advance knowledge or approval), presumably planted there by the Sweepstakes' promoters. (Note to all large lottery winners and those hoping to join their ranks: maintaining your anonymity is very difficult, as lottery officials love to publicize their lotteries' big payoffs and may blow your cover).

Our classmate told us an IRS agent had read the local newspaper and opened an investigation based on the Sweepstakes story. As a result, the milkman was facing tax liability on some 30-plus years that he failed to file tax returns, along with potential civil and criminal sanctions, all because he had the misfortune of winning the Irish Sweepstakes! My colleague wanted to know if there was anything we could do, and specifically, if the milkman gave up all of his prize, would the revenooers just go away? See Shop Talk, "IRS Scours Newspapers for Large Awards," 97 JTAX 63 (July 2001).

We never found out the milkman's name or whether he went to prison, but we saw first hand how the tax system can indeed take all the joy out of being the grand prize winner. One could surmise, however, that the third-place winner of the Sweepstakes—the recipient of a much smaller prize—garnered no IRS audit attention.

Flash forward to 2008 for "The Main Event of the World Series of Poker," which concluded in Las Vegas in November. The event drew more than 6,800 players, all dropping in a $10,000 entry fee and all seeking their pot of gold—which turned out to be slightly more than $9,150,000 for the first-place winner, a 22-year-old Danish national named Peter Eastgate. His prize swamped the amount won by the third-place winner, Dennis Phillips of Cottage Hills, Illinois, who won about $4.5 million. But thanks to the tax laws, once again we'd rather have been the third-place winner than the grand-prize winner.

How come? According to Enrolled Agent Russ Fox (of Clayton Financial and Tax of Irvine, California), who writes on the Taxable Talk website, Mr. Eastgate will get hammered by the tax laws applicable to gambling winnings. The U.S. and Denmark have a tax treaty that provides that foreign winners at casinos must pay taxes to their country of residence (Denmark), rather than where they win (here, the U.S.). So the IRS loses here, but Mr. Eastgate loses more. According to Fox's website, for casino gambling, the applicable tax rate is 45% on a Danish taxpayer's first 4 million Danish kroner, and 75% on his income above that amount. According to Fox's computations, Mr. Eastgate will have an effective tax rate of 72.77% of his winnings. In other words, he will only keep approximately $2,491,000 (27.23%) of his first-place prize, while owing approximately $6,660,000 to SKAG (Denmark's version of Uncle Sam).

But Illinois resident Phillips, who won about $4.5 million as the third-place finisher, will owe approximately $1,560,000 to the IRS, according to Mr. Fox, and approximately $136,000 to the Illinois Department of Revenue (based on Illinois' flat 3% state tax rate). More good tax news for the third-best poker player in the world: As he reportedly is an amateur (not in the trade or business of gambling), he would not appear to be subject to self-employment taxes on his winnings!

The net result for Mr. Phillips: his take-home amount, after taxes, should be approximately $2,804,000, whereas Mr. Eastgate, the first place winner, will net only about $2,491,000. As one commentator observed, a net of $2.5 million for a college-age kid for winning a poker tournament is still an insane amount of money, but the tax bite constitutes a lot of chips going into someone else's pockets. (See Roeper, "A Very Taxing Final Table," Chicago Sun-Times, 11/17/08, page 11.)

Once again, better to have been the third-place winner than the grand-prize winner, thanks to income taxes. Of course, Mr. Eastgate, facing Danish tax rates, undoubtedly would rather have been the first-place winner than the third-place winner, but given their respective marginal tax rates, we'd still rather be Mr. Phillips!"

And I thought the show bet was a dumb bet.....and doesn't SKAG seem to fit the IRS?

A TBA welcome to blog sites Amateurcapper, Gallop France, Keiblog, Michigan-Bred Claimer and The Chalk Eating Weasel, all bright new additions to our growing (49!) alliance of racing blogs. Check out the home page and vote for your favorite Do-Over photo of the year for 2008!