Updated Internet Gambling Bill Introduced

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Democrat Representative Jim McDermott of Washington State has introduced the Internet Gambling Regulation and Tax Enforcement Act of 2010. McDermott had introduced a similar bill in 2009, which was a companion to Representative Barney Frank's Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267). Almost a year has passed since then and McDermott has seen fit to introduce a revised bill now that would reflect the developments of the last one year.

The basic objective of the 2010 bill, and the earlier ones, was to define how the taxes and fees are to be raised from online gambling activities and how these funds are to be used. Today all except six states anticipate budget deficits for the 2011 fiscal year budget. Therefore it has become essential to ensure that the states get a reasonable share of this revenue. Also tribal governments, whose main revenue is from land casino gambling, fear that they may lose revenue after online gambling becomes legal. Therefore they too need some surety. The Internet Gambling Regulation and Tax Enforcement Act of 2010 proposes that each State and Tribal Government be paid 6% of all deposits placed in their jurisdiction with online gambling operators. This is the major point of departure from the earlier bill. It has been estimated that this provision, combined with other applicable taxes, would generate new revenue of at least $30 billion for the State and Tribal Governments over 10 years. The legislation also proposes that 25% of the revenue generated should be used to provide assistance for those in foster care.

McDermott had introduced this kind of bill for the first time in 2007, soon after the UIGEA was passed. That time he outlined the necessity of such legislation. He pointed out that whether the legislators approve of the gambling or not is not the issue. Land based gambling is both legal and rampant in the United States and this gambling is taxed by the governments and provides revenue that is put to social benefit. Just because gambling is moving online it should not be treated differently. What is happening is the Americans are gambling in offshore locations and providing revenue for non-American companies and governments.

Democrat Representative Barney Frank from Massachusetts, Chairman of the House Financial Services Committee, Democrat John Larson from Connecticut, Chair of the House Democratic Caucus, and Earl Blumenauer have signed on as original co-sponsors of the Internet Gambling Regulation and Tax Enforcement Act of 2010. Frank's own bill is presently in the House Committee. HR 2267 reinforces the rights of each State and Tribal Government to determine whether to allow online gambling activity for people accessing the Internet within their borders. But it is unlikely that many states would go for that option. Sensing that the issue is not moving ahead at the federal level, California, New Jersey, Florida and Iowa are already independently exploring the possibility of legalizing and regulating online gambling in their jurisdictions.

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