Bill introduced to eliminate automatic 25 percent
pari-mutel withholding
A bill was introduced in the U.S. House of Representatives on Tuesday that
would eliminate the automatic 25 percent federal withholding on pari-mutuel
winnings of $5,000 or more for bets that carry odds of 300-1 or higher. The “Pari-Mutuel
Conformity and Equality Act” (PACE Act) was introduced by Rep. John Yarmuth,
with Rep. Charles W. Boustany Jr. the lead co-sponsor.
Unlike any of its competitors in other gaming industries, the pari-mutuel
industry is burdened by an inequitable tax law that requires waging facilities
to withhold federal taxes on winnings over $5,000 if the odds are at least 300
times the amount wagered. The PACE Act (H.R. 2140) would amend the Internal
Revenue Code of 1986, whose withholding threshold has remained unchanged for 17
years and was last increased in 1992, from $1,000 to $5,000.
Since then, exotic wagering (bets involving high odds and high potential
returns) has grown tremendously in the United States, now accounting for
two-thirds of all pari-mutuel wagers placed.
“The negative impact of withholding is multi-faceted,” said Peggy Hendershot,
the NTRA’s Senior Vice President of Legislative Affairs. “For the betting
public, it has meant a confiscatory and frequently unfair loss of available
capital. That loss of reinvestment or ‘churn’ leads to a reduction in overall
wagering that in turn means less revenue generated for state governments,
racetracks, and purse money for horsemen. The PACE act would also reduce the
high burden of administrative compliance for pari-mutuel operators.
“Our industry and our fans applaud Congressmen Yarmuth and Boustany for
introducing this important legislation and we look forward to working with our
NTRA Horseplayers’ Coalition to add support to this initiative,” Hendershot
added.