NTRA commissioner Tim Smith.

NTRA commissioner Tim Smith.

Skip Dickstein

House Bill Calls for Elimination of Withholding Tax

A provision to eliminate the 30% withholding tax on foreigners who wager on pari-mutuel racing in the United States is part of a broad military tax-break bill scheduled to be addressed March 6 by the U.S. House of Representatives.

The Washington Post reported that the pari-mutuel provision was one of several inserted into the bill before it was considered by the House Ways and Means Committee. Some Democrats told the newspaper they would push to have the special-interest provisions stripped from the legislation.

The pari-mutuel industry for some time has sought to get the 30% withholding requirement eliminated because it is a major hindrance to plans to expand wagering internationally. Canadians, for instance, wager on U.S. races in separate pools because they are subject to the 30% tax on winnings. If the tax were gone, it could lead to common pooling, which would increase betting pools.

Advocates argue revenue would actually increase without the tax. Said Louisiana Rep. Jim McCrery: "There is no money coming in because nobody's stupid enough to place a bet in our betting pools, knowing they have to give away 30% of their money."

National Thoroughbred Racing Association commissioner Tim Smith said Canadians wager about $700 million a year on U.S. races. That money would end up in U.S. pools and boost industry business, he told the Post.

Even if the measure passes the House, it must reconcile with legislation in the Senate that does not contain the added tax-break provisions.