Law Opening U.S. to Foreign Bets Expected Next Year

A proposal to lift a 30% withholding tax on successful wagers made on races in the United States by foreign bettors has received broad support, but probably won't become law until next year.

"The problem is that as a tax bill it must be attached to tax legislation," said Greg Avioli, deputy commissioner for the National Thoroughbred Racing Association. "Because it will have such a small impact on the budget, it would never be considered on its own."

If bill comes law it will remove a major obstacle that now keeps hundreds of millions of dollars out of U.S. wagering pools. Because of the stiff withholding penalty, foreign racetracks and off-track betting outlets offer only separate pools on U.S. races. Canada is affected the most because its residents bet the most on U.S races. The relatively smaller pools hurt Canada by discouraging bets from high-rollers whose wagers could dramatically affect the odds, and the tax hurts U.S. tracks by denying them the takeout on more than $350 million in handle.

Congress is in the midst of winding down its current two-year session and is expected to finish business for the year by mid-October. Anything that does not pass this month will likely have to be reintroduced next year when the new congressional session begins.

Avioli said it is possible that a lame duck session could be convened for about 30 days in November, following the elections, and that the withholding issue could come up for a vote. The chance is unlikely, however.

Next year the bill should pass through the system quickly. The General Accounting Office has already reviewed the bill and determined it will not affect the budget. The legislation is already drafted and has already received support by Republicans and Democrats in the House and Senate.

"And assuming there is no radical change, the committee members are all familiar with the issue," Avioli said.