Pete,
Rather than delete the above message and re-doing it I will just add the following to my explanation.

The instructions for the form involve withholding tax from the proceeds of a "win". The 300 to 1 rule is ALSO for withholding. You can have a payout that meets the 300 to 1 rule but does NOT reach the $5,000.00 amount for wagering pools. Such as a payment of $600 for a $2.00 bet at the race track. Here the 300 to 1 comes into play BUT NOT the $5,000 limit that pertains to a wagering pool. The $600.00 payout would be subject to withholding BECAUSE of the 300 to 1 rule.

When you have a wagering pool if the payout is $5,000 or more the withholding agent MUST withhold whether you have 300 to 1 or not. This is what I meant when I said the 300 to 1 rule NEVER affects wagering pools and their payouts. If you have a wagering pool one must withhold if the payout is $5,000 or more. the 300 to 1 rule NEVER comes into play.

Now you see why the instructions issued by the IRS are not complete. Also instructions are not law.

NOW AMEN!
Best, Mr."P"