Less Is More…

by Ed Meyer

posted on May 1, 2009 in General Discussion, News | No Comments >>

A bill was introduced in the U.S. House of Representatives last night 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 (D-KY). Rep. Charles W. Boustany, Jr. (R-LA) is 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 wagers (bets involving high odds and high potential returns) have grown tremendously in the U.S., 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.