J.R. 7                                . 1994 JOINT RESOLUTIONS

Joint Resolution No. 7
(Senate Joint Resolution No. 13)

A Senate Joint Resolution concerning

Pari-Mutuel Wagering - Federal Excise Tax

FOR the purpose of requesting the Maryland Congressional Delegation to oppose the
imposition of a federal excise tax on pari-mutuel wagering or an increase in the
federal withholding on winnings from pari-mutuel wagering.

WHEREAS, A White House Task Force on Welfare Reform has recommended
establishing a 4% excise tax on pari-mutuel wagering and increasing the percentage
withheld on winning wagers of $5,000 or more from 28% to 36% when the odds are at
least 300 to 1 to fund welfare programs; and

WHEREAS, In pari-mutuel wagering, the bettor is betting against peers of fellow
bettors and the industry relies on winning bettors to rebet their winnings on subsequent
races so that the money is "churned" several times during the course of that day at the
racetrack; and

WHEREAS, Adding an excise tax would increase the takeout rate at the track and
increasing the withholding would withdraw money from the betting pool, thereby
reducing the "churn" effect since this money would not be rebet; and

WHEREAS, A 4% excise tax is estimated to result in a 40% decrease in handle
which would equate to a $5.6 billion loss in betting volume nationwide; and

WHEREAS, When the Subcommittee on Select Revenue Measures of the House
Committee on Ways and Means considered a similar withholding proposal in 1993, the
Assistant Secretary for Tax Policy of the Department of the Treasury stated that the
Administration was opposed to an increase from 28% to 36% because it would result in
overwithholding in many cases; and

WHEREAS, Over the past five years, 8 major racetracks, including Freestate in
Maryland, have closed and betting and attendance has been unable to keep up with
inflation; and

WHEREAS, The closing of a racetrack would result in the loss of thousands of
unskilled jobs and many of the unemployed individuals would be forced to join the
welfare rolls or receive unemployment benefits; and

WHEREAS, The horse racing industry, employs grooms, exercise personnel,
farriers, veterinarians, jockeys, mutuel clerks, parking lot attendants, administrative and
executive personnel, feed company personnel, restaurant employees, maintenance
employees, and skilled workers from the building trades; and

WHEREAS, The Maryland horse racing and breeding industries comprise a vital
part of the Maryland economy, generating about $1 billion in economic activity and
20,000 jobs; and

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