By
Dan |
Published
Sep 06 2007, 06:21 PM
|
When many outsiders examine the internet gambling situation, they always come back to one thing: money. Why doesn’t the United States Government just tax internet gambling revenues? Why put an effective ban on an industry that can be so lucrative? The answers to these questions and more lie in the aptly named
Internet Gambling Tax Act. Known as H.R. 2607 in Congress, it was proposed by
Congressman Jim McDermott (D-WA) and offers up a framework for the Federal Government to tax the multi-billion dollar industry.
The bill was referred to the House Ways and Means Committee on June 7th and currently awaits debate. It’s the last of four bills concerning online gambling sitting in the U.S. Congress.
The Text
The Congressional Research Summary gives an easy to understand synopsis of what the Internet Gambling Tax Act will do: The bill “amends the Internal Revenue Code to establish licensing requirements and fees for Internet gambling operators. It requires Internet gambling operators to pay to the Director of the Financial Crimes Enforcement Network during each 30-day period of operation a license fee of 2% of all bets and wagers placed during the preceding 30-day period. It requires the Director to grant Internet gambling licenses to applicants who meet criteria set by the Director and are generally fit to engage in the business of Internet gambling. It requires such operators to adopt appropriate mechanisms to ensure the collection of all taxes and license fees relating to Internet gambling that become due to federal and state governments.”
The Co-Sponsors
The bill was introduced back on June 7th and has since attracted one Co-Sponsor, Rep. Neil Abercrombie (D-HI).
The Update
According to Poker Players Alliance Executive Director John Pappas, this bill will eventually be attached to another existing online gambling bill: “The Internet Gambling Tax Act is technically a stand alone bill; however, in practical matters it would never move on its own but rather as part of a larger Internet gaming regulation bill.”
The ability for the government to be able to tax this multi-billion dollar industry will come into play when deciding which initiatives to pursue in the fall: “Certainly the potential to tax Internet gaming (through regulation) is a very attractive prospect for the federal and state governments. Every current form of regulated gaming (lotteries, para-mutual, and casinos) is a tax revenue generator. The McDermott bill makes passing Barney Frank’s bill (H.R. 2046) more palatable for many members of Congress.”
The PPA has been much more quiet on the Internet Gambling Tax Act: “The PPA has not taken a position on the bill, but we do believe that taxation of Internet gaming (in some variety) is inevitable. Our hope is to limit the tax burden on players and McDermott’s bill only seeks to tax operators, so that is a positive. It is important to remember that the federal government could raise considerable revenue with just Barney Frank’s bill too. His legislation requires mechanisms so online players can accurately report their taxes each year. This would not be a new tax; it would simply capture lost revenue from poker winnings that are not currently being reported. While no one, especially poker players, wants to be paying more taxes, they should and must pay the rightful taxes they owe.”
Stay tuned to PocketFives.com for what promises to be a critical session of Congress this fall.
News Resources
Read the text of the Internet Gambling Tax Act by clicking here.
Track the bill on GovTrack.
Become a member of the Poker Players Alliance.