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Poker News | Gambling and the Law

Online Gaming Regulation Could Benefit Government

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Last week, the House Judiciary Committee held the Hearing on Establishing Consistent Enforcement Policies in the Contest of Online Wagers. While John Conyers led the hearing, Annie Duke testified on behalf of the Poker Players Alliance, and numerous guest speakers also addressed the panel to address all sides of the issue.

Representative Jim McDermott (D-WA) was one of those who testified at the hearing, and he revealed the results of a recent tax revenue analysis that showed the kind of sizable revenue that the U.S. government could reap should it tax and regulate online gaming. The conclusion of the analysis estimated that online gaming would generate between $3.1 and $15.2 billion in federal revenues over the first five years of regulation, leading to between $8.7 and $42.8 billion over the first ten years.

McDermott said, "Even under the most conservative estimates, licensing and regulating internet gambling - and collecting the taxes that are due - will provide much-needed revenue to the U.S. Treasure. This is money we are currently losing to other jurisdictions, for no other reason than some of my colleagues think we can actually stop people from gambling online. It is money we will continue to lose if we ignore the fact that if grown adults in America want to gamble online, they can and they will."

On June 7, 2007, McDermott introduced legislation in the form of H.R. 2607 - the Internet Gambling Regulation and Tax Enforcement Act - that would provide for the taxation of licensed internet gambling in the United States. "I introduced this bill not because I am a proponent of internet gambling - I am not - but because I am not blind to the fact that people will continue to gamble online regardless of any prohibition against it. I therefore believe that the only appropriate, reasoned response is to regulate internet gambling, so customers are afforded certain protections and so revenue that would otherwise flow to foreign jurisdictions stays here in the U.S."

McDermott's bill serves as a companion bill to Representative Barney Frank's proposed legislation - the Internet Gambling Regulation and Enforcement Act - that was introduced in April of 2007 and calls for the licensing of internet gaming sites and enforcement of certain regulations. McDermott's bill currently only has one cosponsor, while Frank's bill has 41 cosponsors to date, but as more attention is brought to the issue and lobbying continues, more members of Congress are considering signing on to the bills.

In response to the figures discussed by McDermott at the hearing, Jeffrey Sandman of the Safe and Secure Internet Gambling Initiative, noted, "It is time for Congress to regulate and tax internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue. Moreover, regulating internet gambling could resolve a dispute around internet gambling in the World Trade Organization that could force the U.S. to pay billions in trade compensation."

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