The Ten-Percenter: How the Feds Say Lone Star Horse Bettors Tried to Avoid Paying Taxes

Categories: Crime, Sports

LoneStarPark.jpeg
Horse racing may be dying, but the horse track remains a uniquely fascinating place, with its mix of blue bloods and lowlifes united by a pursuit that cuts across all class lines: gambling. Even Lone Star Park in Grand Prairie, a venue that from the outside seems relatively staid, is party to its share of interesting happenings, like notorious cartel bosses who launder millions in drug proceeds while ascending the ranks of the American quarter-horse industry.

There are more mundane ways of breaking the law at a horse track, too. Like tax evasion. Take Willie Loveless, who was indicted by the Feds on Tuesday for allegedly concealing more than $1.76 million in gambling winnings from the IRS.

The indictment is something of a primer on where and how federal tax law and horse racing intersect. Horse tracks, the indictment explains, are required by federal law to issue an IRS Form W-2G whenever winnings exceed $600, provided the payout is at least 300 times the wager. Whenever a payout tops $5,000, the track automatically takes 25 percent off the top for taxes.

Gamblers, who are surprisingly unimaginative when it comes to coining slang, refer to winning tickets subject to taxes as "IRS tickets" and call the windows where they take them "IRS windows."

They are more imaginative when it comes to keeping Uncle Sam's grubby paws off their hard-earned gambling winnings, having developed something of a system. Regular gamblers hoping to avoid the mandatory taxes sometimes employ intermediaries to cash their tickets. By way of payment, these intermediaries typically charge about 10 percent of the ticket, which is why they are known in gambling circles as ten-percenters. The practice itself is called -- wait for it -- ten-percenting.

According to the indictment, Willie Loveless was one of the ten-percenters. Between 2008 and 2010, he signed 1,445 W2-G forms at Lone Star Park, claiming that the $1.76 million in tickets he was cashing were his. The Feds say they weren't. It's not clear from the indictment if Loveless ended up paying taxes based on the W2-G forms he filled out.

Loveless is charged with one count of obstructing the administration of IRS laws and 20 counts of making fraud and false statements to the IRS. The former carries a maximum fine of $5,000 and three years in prison. Each of the latter counts carries a possible fine of $100,000 and three years in prison.

All for pulling in nearly $60,000 per year. Good work if you can get away with it.

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4 comments
bocbob2004
bocbob2004

The track doesn't take money out of your winning ticket when you cash it they take money out of the pools at the close of wagering depending on the type of bet it ranges from 15-35% . say you have $10k in the tri pool and the takeout is 20% that will leave $8,000.00 to pay to the peopl who hold a winning ticket and as long as that winning ticket is worth less than $602.00 your fine you will collect the full amount if it goes over that anount you will have to fill out a form that you submit to the IRS when you file your taxes this is where folks pay guys like MR Loveless people its cheaper to pay him this amount of 10% then pay uncle sam.  

ScottsMerkin
ScottsMerkin topcommenter

The way most of the degenerates try to keep winning tickets under $5k is by making lots of $1 tri boxes and exacta box bets.  They make the same bet lets say 10 times on the same race with the same horses.  So he hits the tri that pay $1,000 for the dollar bet, so cashing 10 $1 tri boxes gets you $10k but since you have them on  ten tickets instead of 1 $10 tri, you stay undre $5k a ticket and dont have the 25% immediately withheld. 

Montemalone
Montemalone topcommenter

I don't understand how anyone benefitted from this. If the track automatically witholds 25% upon redemption, what good does it do to give someone else 10%?

joe.tone
joe.tone moderator

@Montemalone You're right, that's unclear here. The scam only works on winnings less than $5,000. So Willie takes $100 on a $1000 winning, fills out the tax forms, never does his taxes and hopes for the best.

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