Bill introduced to House panel that would drop withholding

Two U.S. representatives introduced a federal bill on Tuesday night that would eliminate the mandatory 25 percent withholding tax on winning horse racing wagers that exceed $5,000 or pay off at greater than 300-1 odds, according to the National Thoroughbred Racing Association.

Rep. John Yarmuth, a Democrat from Kentucky, introduced the bill to the House Ways and Means Committee. The lead co-sponsor is Rep. Charles Boustany, a Republican from Louisiana.

The NTRA has pushed for similar legislation over the past several years, but efforts to get the bill through the full Congress have been compromised by the perception that elimination of the withholding would be a giveaway to horse racing bettors.

Critics of mandatory withholding state that the policy makes no allowance for the amount of money that bettors typically wager when attempting to cash the types of bets that result in payoffs at long odds. For example, if a bettor spends $2,000 on a pick six ticket that pays $20,000, the winnings are subject to mandatory withholding even if the actual payoff was 10-1.

NTRA lobbyists have also stressed that the withholding policy reduces the amount of money that bettors wager back into the pools. That affects the health of the racing industry and the tax receipts generated by the industry for states, the lobbyists have said.