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Poker News | Gambling and the Law

McDermott Introduces New Online Gaming Legislation

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The U.S. Congress has many staunch supporters of online gaming and the advancement of legislation to promote its regulation. One of them is Rep. Jim McDermott (D-WA), and though he’s not typically at the forefront of introducing major gaming legislation, that all changed this week with his proposal of H.R. 4976, the Internet Gambling Regulation and Tax Enforcement Act of 2010.

It was only within the past two weeks that Rep. Barney Frank was quoted speculating that none of the pending bills will be passed in time to stop the UIGEA regulations from going into effect on June 1, 2010. Despite Frank’s current bill having over 60 co-sponsors and having gone through a successful committee hearing in November of 2009, its slow pace matches that of the Senate bill proposed in 2009 by Robert Menendez.

Enter McDermott. He had a bill pending in the House that piggybacked Frank’s 2009 bill; McDermott’s bill added the taxation factor necessary to make online gaming regulation favorable and beneficial to the federal government. On March 25, 2010, he revamped that bill and reintroduced it as the Internet Gambling Regulation and Tax Enforcement Act of 2010, which took his tax provisions and combined them with regulation and licensing specifications to make it a comprehensive bill unto itself. In addition, he added other provisions, one of which looks to allow state and tribal governments to receive six percent of all online gaming deposits made on websites in those specific jurisdictions, which looks to provide approximately $30 billion for states and tribes over the next ten years. The bill also contains specific language noting that 25 percent of the revenue collected on a federal level will garner about $42 billion over the next ten years and be dedicated to providing assistance for foster care programs. The revenue estimations came from the Congressional Joint Committee on Taxation.

Michael Waxman of the Safe and Secure Internet Gambling Initiative commented on McDermott’s proposal, “This legislation is a win-win for federal and state leaders, providing an opportunity to regulate a currently off-shore and underground industry, protect consumers and put to good use tens of billions in otherwise lost revenue. At a time when many policy makers are faced with significant budget shortfalls, it is only common sense to choose regulation that will generate new revenues and create new jobs currently offshore as an alternative to layoffs, program cuts or imposing broad-sweeping taxes that may further depress struggling families and businesses.”

Whether McDermott’s bill will gain any ground remains to be seen, as the hopes of the gaming community have been dashed numerous times as proposals are introduced but fade without gathering momentum. The need for federal and state revenue is great during these trying financial times, but lobbying organizations have yet been unable to parlay that into support for these revenue-generating bills. However, if McDermott can gain the support of Indian tribes and state governments, H.R. 4976 might have a chance.

On the day it was introduced, it was referred to the Committee on Ways and Means and the Committee on Education and Labor for consideration. And three members of the House of Representatives signed on immediately as co-sponsors - Barney Frank (D-MA), John Larson (D-CT), and Earl Blumenauer (D-OR).

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