Yarmuth Introduces Bill to End Automatic Withholding at Race Tracks
Press Release
PACE Act would lift unfair burden on Churchill Downs & horse racing fans
Today, Congressman John Yarmuth (KY-3) announced that he has introduced H.R. 2140, the Parimutuel Conformity and Equality (PACE) Act, which will end the current federal requirement that forces wagering facilities to immediately withhold federal taxes of 25 percent on winnings over $5,000 if the odds on the bet are at least 300-1.
"It is simply unfair that a low-dollar better who hits it big walks away from the window with only 75 percent of their winnings, while a high roller that wins the same amount is not subject to the automatic withholding," Congressman Yarmuth said. "It is also wrong to assume that horse racing fans will cheat on their taxes and unnecessary to force racetracks to act as agents of the IRS."
"We want to thank Congressmen Yarmuth for his leadership and support of the thoroughbred industry with the introduction of this important bill," said Kevin Flannery, Senior Vice President of Churchill Downs Incorporated. "The eyes of the world will be focused on the 135th running of the Kentucky Derby this Saturday. Passage of the PACE Act is an important step to protect the economic vitality of the sport and the Derby for many years to come."
Currently, the only segments of the gaming industry that are subject to the automatic withholding are horse races, dog races, and jai alai matches, creating a disadvantage for businesses competing with other forms of gaming entertainment and increasing the burden of pari-mutuel operators like Churchill Downs. The PACE Act does not alter reporting requirements for winning bets, but returns that responsibility from tracks to the IRS.
The PACE Act also levels a playing field that currently favors high dollar bettors over those making smaller bets. Placing large bets with low odds currently are not subject to the same rules as smaller bets with high odds. Even though the payout could be the same, the low dollar bettor would only be able to walk away with 75 percent of the winnings under current law.
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