Congressman Jim McDermott, a Democratic representative from the state of Washington, introduced a new piece of legislation yesterday entitled the Internet Gambling Regulation and Tax Enforcement Act of 2008. This newest piece of legislation is merely an amendment to previous proposed laws that he has been trying to push through for months.
The newest update to McDermott’s ongoing work, aimed at reversing the UIGEA legislation, would ensure that taxes are collected on all regulated Internet gambling activities in the United States. According to a recent tax revenue analysis compiled by PricewaterhouseCoopers, the United States government could rake anywhere from $8.7 billion to $42.8 billion over the next ten years.
McDermott’s newest legislation serves to strengthen already existing provisions from an earlier version of the bill. The first version of the bill was introduced in 2007 and has only been gaining momentum. One of the new provisions of the most recent version of the bill includes an enhanced reporting mechanism under which licensed gambling operators would be required to provide each and every customer an annual statement of their winnings and losses. It also creates a 2% licensing fee that will have to be paid by the online gaming operators.
The licensing fee is said to be designed in order to equalize the costs of operation while providing gambling services online as opposed to running a concrete, brick and mortar casino. This fee, therefore, would only be applied to online operators and would not apply to physical casinos.
"Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service," said McDermott. "These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation's priorities."
McDermott’s legislation functions as a companion bill to the Internet Gambling Regulation and Enforcement Act (H.R. 2046), which is a bill that was introduced by Representative Barney Frank that would also serve to regulate Internet gambling in the United States.
Under Barney Frank’s legislation, online gambling operators would be licensed by the Financial Crimes Enforcement Network (FinCEN) and they would be required to ensure that individuals placing bets or wagering on their site are physically located in a jurisdiction that permits the forms of gambling in which they will be partaking.
Furthermore, the legislation would also reinforce the rights of states to control the level of Internet gambling that will be permissible within their borders. This includes the ability to apply any additional taxes which they see fit as well as ensuring that appropriate consumer protections and limitations are in place.
"By not regulating and taxing Internet gambling, the United States is forfeiting billions of dollars in revenue needed for critical government programs," said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. "It is time for Congress to address this issue and put in place security controls to protect the millions of Americans that continue to gamble online despite the prohibition."