By
P5s Staff |
Published
Oct 29 2009, 03:50 PM
On Thursday, Congressman Jim McDermott (D-WA) announced the results of a study of the internet gambling industry performed by the U.S. Government’s Joint Committee on Taxation (JCT). What resulted is the affirmation that legalizing and regulating the internet gambling industry in the United States, including online poker, would yield billions of dollars in much-needed revenue to the Federal Government. This time, the potential windfall was up to $42 billion over a 10-year period. The news comes just a few weeks removed from mandatory financial services industry compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA). Read the internet gambling revenue report.
Safe and Secure Internet Gambling Initiative (SSIGI) spokesperson Michael Waxman highlighted the significance of the JCT’s report: “This is significantly different and more important to the cause than studies before, which have been done by PricewaterhouseCoopers and have been privately funded. The JCT is a Congressional office and a Congressional committee. It sets a marker for members of Congress as to the revenue that would be generated.” Up to $4 billion per year for 10 years could be generated in an industry that is expected to grow leaps and bounds should it eventually be normalized in the United States. Previous studies had concluded that $50 billion or more over a 10-year period could be raised.
The $42 billion revenue figure is derived from McDermott’s (pictured at left)
HR 2268, the Internet Gambling Regulation and Tax Enforcement Act. The measure imposes a tax of 2% of deposits on licensed internet gambling outfits that solicit U.S. customers. The scenarios examined by the JCT include a 4% tax level, a 6% tax level, and participation by states and Indian tribes, who may ultimately choose to opt out of the legislation. All told, the estimates in the JCT’s final product reveal that between $10 billion and $42 billion could be raised over a 10-year period.
HR 2268 is a companion bill to Congressman Barney Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act,
HR 2267. The latter bill establishes a complete licensing and regulatory framework for the internet gambling industry in the United States and is up to 62 cosponsors. HR 2267 and HR 2268 were introduced on the same day back in May along with
HR 2266, which was also pioneered by Frank and delays the mandatory compliance of the UIGEA regulations by one year to December 1st, 2010.
On the importance of the JCT weighing in on the internet gambling issue, Interactive Media Entertainment and Gaming Association (iMEGA) Chairman
Joe Brennan told Poker News Daily, “It's an affirmation of what the industry has already put in front of Congress as far as regulating internet gambling. When you have the JCT coming in and weighing in on it, that's meaningful.” The study is dated October 23rd and Thomas Barthold serves as its author.
McDermott commented in a press release distributed by his office, “Given the many critical government programs currently going under-funded or not funded at all, internet gambling regulation should be given fair and immediate consideration. Prohibition in various guises has failed before and is failing once again. There is a better way.” A recent version of the proposed
health care reform has a price tag of nearly $900 billion. The
Cash for Clunkers program featured government assistance in the purchase of 6.9 million vehicles. Internet gambling could, in theory, help foot the bill for these and other programs.
Brennan admitted that internet gambling legislation like HR 2267 may become part of a larger pool of bills used to fund social programs. He explained, “When people take a look at the numbers, this may start to turn a few heads for those who are financial conservatives and not necessarily social conservatives.” Ever since the UIGEA was signed into law in 2006 after becoming part of the SAFE Port Act, the industry has clamored to be taxed and regulated.
The
Poker Players Alliance (PPA), the industry’s 1.2 million member strong lobbying force, has reached out to U.S. Treasury Secretary
Timothy Geithner and Federal Reserve Chairman
Ben Bernanke in an effort to stave off credit card companies, banks, and other financial institutions from clamping down on internet gambling purchases. So-called “overblocking” by Visa and MasterCard of legal online lottery purchases earlier this year may foreshadow the status quo of the industry to come.
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