BestCraps.com

McDermott Sees Enormous Tax Gains For Congress From Online Gambling

Posted on May 20th, 2010

News Sponsored by Online Vegas Casino

Rated 5 Stars by BestCraps.com

Read Review

Visit Casino

Download Software

————————————————

U.S. Representative Jim McDermott, D-Washington, has filed a bill in Congress that would require tax enforcement on online poker and other forms of online gambling. McDermott was initially just trying to find other means to fund care for foster children in the country, a charitable project he is most interested in. He realized that the passing of his bill would very much benefit not only the foster children, but would mean a lot of money still for the federal government, even after taking the foster care’s share. “I’ve gotten a thousand ideas pumped at me about what we should do with the money,” McDermott said. Based on careful study made by the lawmaker’s office, taxes from Internet gambling could yield as much as $42 billion for the federal government in a period of 10 years and around $30 billion for the state governments. McDermott says online gambling is a good source of funds because it is something that millions of people are going to engage in.

Under McDermott’s bill, Internet gambling companies would have to pay the federal government a 2 percent tax on betting deposits and to the state government, a 6 percent tax. Profits of gaming companies would also be taxed as well as the money won by bettors. McDermott’s bill serves as an attachment to legislation filed by U.S. Rep. Barney Frank, D-Massachusetts that intends to legalize most forms of Internet gambling under the supervision of the Treasury Department, thus overturning the Unlawful Internet Gambling Enforcement Act (UIGEA).

It also seeks to delay law enforcement banning online betting via banks, credit card companies and other financial institutions that would take effect June 1. Opponents of UIGEA say the law has some ambiguous points. For instance, the law bans online betting starting next month, but some states allow online wagering on dog and horse racing and in California, some people buy lottery tickets on the Internet.

McDermott’s bill, acting as a funding device, therefore hinges on the success of Frank’s bill. Both he and Frank decided to have legislators consider McDermott’s bill first to be able to highlight the impact of taxing online bets before lawmakers start debating on Frank’s bill. The House Ways and Means Committee, one of the most influential boards in Congress will hear McDermott’s legislation on Wednesday. Frank has said he will present his own bill to the House Financial Services Committee which he chairs, after Congress wraps up on another bill that concerns Wall Street.

Poker Players Alliance Executive Director John Pappas says an increasing number of U.S. residents are gambling online, using Web sites based outside the United States. According to information from U.K.-based H2 Gambling Capital which provides data related to gambling, the two biggest offshore gambling sites that provide services for U.S. players are Isle of Man-based PokerStars, and Ireland-based Full Tilt Poker.

H2 also reports that the U.S. offshore online gambling market is likely to grow this year to $5.7 billion from $5.4 billion in 2009, and could further expand to $24 billion over five years if the United States legalizes Internet gambling. The figure does not take account of sports betting, as legislative proposals do not allow it. The international online gambling market is around $30 billion. Frank’s legislation requires gambling operators to install safety measures to ensure that no obsessive or underage gambling occur and people respect and abide by the laws of states that decide to ban online betting. The bill makes sure that players are safe from a range of illegal activities.

Online gambling legislation has several supporters, among them the Poker Players Alliance and the world’s biggest gambling company based in Las Vegas, Harrah’s Entertainment Inc. Another backer, the Washington-based group, Safe and Secure Internet Gambling Initiative which represents financial services companies said through its spokesman Michael Waxman that Internet gambling provides Congress “a huge new source of revenue that is just sitting there on the table.” However, the proposal to legalize, regulate and tax Internet gambling has an indomitable foe in the person of Alabama Republican Rep. Spencer Bachus who sits on Frank’s committee. He called the attempts to legalize and tax online gambling the “crack cocaine of gambling,” and vowed to make a supreme effort to block the bill’s passing.

In 2006, the UIGEA garnered an extremely large support in the House which voted 317-93 to pass the law banning online betting, with Democrats who voted for the ban numbering 115. Bachus worries that lawmakers who previously were against legalization of online gambling might be swayed by the large estimates of new government revenue. Bachus said revenue projections for McDermott’s bill are overestimated with the idea that every state would take part.