Pari-Mutuel Conformity and Equality Act of 2009

Introduction

Currently, when bettors win more than $5,000 at odds of 300-1, 25% of the winning amount is withheld by the Internal Revenue Service. This means that many bettors have money held by the federal government for a lengthy period before it is returned when the individuals file their tax returns the following year.

It has been estimated that a winning dollar is re-bet three times at a race track. When these withheld amounts are not available to be re-bet, there is less “churn” and less revenue available to race tracks, horsemen’s purses and state coffers. Passage of this legislation would benefit the racing industry by increasing the revenue to all.

House Bill

On April 28, 2009, Congressmen Charles Boustany (R-LA) and John Yarmuth (D-KY) introduced the Pari-mutuel Conformity and Equality Act of 2009 (H.R. 2140). This legislation would repeal the federal withholding tax on pari-mutuel gambling winnings.

Pari-mutuel racing is the only form of wagering that is subject to the $5,000 withholding requirement. That threshold and withholding rate has been in force for many years, although the betting patterns in the racing industry have changed substantially during this time. Now most wagers are “exotic” wagers involving various combinations of bets on the same race, rather than simply win, place or show. These “exotic” wagers are far more likely to be subject to withholding because the odds of winning are substantially higher.

The change in betting patterns has made the withholding tax on racing even more onerous and unfair.

House Action

The bill was referred to the House Ways and Means Committee.

AHC Position

The AHC supports this legislation. The 111th Congress adjourned without final action being taken on this bill.