Is Texas sales tax due on simulcast horse/dog racing services purchased by a racetrack for its patrons to view, and can the racetrack buy those services for resale?

Plain-English summary

A taxpayer wrote to the Comptroller's office asking about the tax treatment of simulcast services sold to racetracks, which the racetracks then show to patrons who watch and wager on the races. The Comptroller responded that these simulcast services are properly classified as cable television services, which are subject to Texas sales tax under Tax Code Section 151.0101(a)(2), because the purchasing racetracks use them to provide amusement services to the people attending the track.

That said, the letter recognizes an important exception: a racetrack can buy the simulcast for resale — without paying tax to the sending track — if the racetrack itself charges patrons admission to view the races and the simulcast. If the purchasing track does not charge admission, it cannot use a resale certificate to buy the simulcast tax-free. In that case, the track must either pay sales tax to the track that sent the simulcast, or accrue use tax on the purchase and report it directly to the Comptroller.

What this means for you

Racetrack operators buying simulcast services

Whether you can buy simulcast racing feeds tax-free under a resale certificate depends on whether you charge patrons admission to watch the races. If you charge admission, the simulcast qualifies for resale treatment. If you don't charge admission, you owe tax on the purchase one way or another — either sales tax charged by the sending track, or use tax you accrue and remit yourself.

Racetracks or vendors selling simulcast services to other tracks

Because simulcasting is treated as a cable television service, sales tax generally applies to what you charge another track for the simulcast, unless that track properly issues you a resale certificate (which it can only do if it charges its own patrons admission).

Accountants and tax professionals

This letter is a useful reference for the resale-certificate analysis specific to simulcast wagering services: the availability of resale treatment turns on whether the purchasing racetrack charges an admission fee to its patrons, not on any other characteristic of the transaction.

Common questions

Q: Is Texas sales tax due on simulcast services sold to a racetrack?
A: Yes. Simulcast services are classified as cable television services and are subject to sales tax under Tax Code Section 151.0101(a)(2).

Q: Can a racetrack buy simulcast services for resale?
A: Yes, but only if the purchasing racetrack charges its patrons admission to view the races and the simulcast.

Q: What happens if the racetrack doesn't charge admission?
A: The simulcast cannot be purchased under a resale certificate. The track must either pay sales tax to the sending track or accrue use tax and report it to the Comptroller.

Citations and references

• Tax Code Section 151.0101(a)(2) (defines taxable services to include cable television service)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9411L1322A12

Original ruling text

November 15,1994

Dear *****:

Thank you for your recent letter regarding the treatment of simulcast
services sold to race tracks for viewing by patrons.

Simulcasting services are properly classified as cable television
services and are subject to sales tax under Tax Code Section 151.0101(a)(2).
They are used by the purchasing race tracks in the provision of amusement
services to track attendees.

However, the services may be purchased for resale if the purchasing track
charges admission to view the races and the simulcast. If the purchasing
track does not charge an admission fee, the simulcast may not be purchased
under a resale certificate, and the track must either pay the sales tax to
the sending track or accrue use tax and report it to the Comptroller.

If you have further questions on this issue, please contact Al Van Allen.
You can reach Al at 800-531-5441, ext. 34680. Let me know any time I can
be of service to you.

Sincerely,

Joe A. Galvan, Jr., Manager
Tax Administration

NOTE: Previous Accession Number 9411671L