Millions of Americans are currently in the process of trying to wade through the thousands of rules, deductions, exemptions, and credits of the federal tax code in an effort to file their tax returns by April 15th. Senators Ron Wyden (D – OR) and Judd Gregg (R – NH) are trying to make things easier by introducing S 3018, the Bipartisan Tax Fairness and Simplification Act, in the United States Senate on Tuesday. The goal of the bill, as written on its first page, is “To amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.”
Those “other purposes” are important because they include a section that would regulate and tax online gambling. In Subtitle C, the two Senators lay out their plan for internet gaming, which is essentially the same as Rep. Barney Frank’s (D – MA) bills, HR 2267 and HR 2268.
If this bill were passed, online gambling companies would be required to apply for and be granted a license to do business in the United States. In order to qualify for a license operators must a) be in good financial and legal standing, b) use technology that can determine the age and location of customers, c) implement systems to protect underage and problem gamblers, d) implement systems to enforce any limitations on internet gambling, be they on the Federal, State, or Indian tribal level, and e) implement systems to fight fraud and money laundering.
When applying for a license, gambling operators may be required to furnish criminal and credit histories of their top executives, financial statements, corporate structure documents, and a document detailing their ability to curb underage and problem gambling and ensure a fair game.
The bill does not legalize online sports betting and does include an opt-out provision for individual states.
As for taxation, S 3018 dictates a 2 percent tax on customer deposits, paid by the online gambling operators. Additionally, a whopping 50 percent tax would be levied on wagers (to be paid by the player) made at an unlicensed site. While this initially seems harmless, as most people wouldn’t play at unlicensed poker rooms, some people have pointed out that should someone want to play as a resident of a state that opts-out of the bill, they would by definition be playing at an unlicensed site, since that site would not be licensed for that state. Therefore, whereas millions of Americans can still play online poker despite its questionable legal standing, many would be unable to under this bill, if their states opt-out. The Poker Players Alliance (PPA) has said that it will work to improve this unlicensed tax rate.
Michael Waxman of the Safe and Secure Internet Gambling Initiative was pleased with the bill’s introduction, saying, “With so much media focus on the differences between Democrats and Republicans in Congress, this bipartisan initiative highlights the growing support on both ends of Capitol Hill for replacing the failed prohibition on internet gambling with a system to regulate the industry, protect consumers, and generate billions in new revenue. We applaud Senators Wyden and Gregg for taking the initiative to address and drive this issue.”
Senators Judd and Gregg, at the time of this writing, have no grade assigned by the PPA on the organization’s Congressional ratings website. One could assume, however, that the two men will be given a high grade in the near future.
The entire text of S 3018, can be found at http://gregg.senate.gov/imo/media/doc/S3018.pdf.

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For nearly two decades, we’ve provided the best in class for poker site reviews, top online poker bonuses, strategy tips, poker news, and exclusive free poker content.  Consisting of a team of poker and gambling experts, we deliver the best online poker brand experience for players of all levels, from the fish to the sharks.