House Proposes Legalizing, Taxing Online Gambling

eldavojohn writes "Passed in 2006, the Unlawful Internet Gambling Enforcement Act is set to go into effect June 1. New efforts by Democrats in the House of Representatives aim not only to stop that but to legalize and tax Internet gambling. Jim McDermott (D-WA), said, 'This is a huge boon to the state governments. If you look across the country you're seeing programs cut. In Arizona, they just cut out a program for children's health for 40,000 kids. Here's a source of money.' Basically, the bill proposes that for each state, a 6% cut would be taken from all wagers and go to the state in which the bet was made online, while federal would get 2%. They estimate in the next decade this would amount to $30 billion for state and tribal governments and $42 billion for the federal government in new taxes. Banks and casinos appear to be very much on board, while the usual crowd (Republicans, Focus on the Family, Think of the Children) gathered in opposition to the move."

Comments

Re:How?

[Anonymous Coward]

Given that many of the current online gambling sites are run anonymously by organized criminal networks outside the US, how would collection or enforcement work?

Many gambling sites that don't allow Americans are taxed and regulated in Europe. Some (such as PartyGaming) are traded on the London Stock Exchange. It's better for business if they are legitimate...they won't even hesitate to follow all the regulations.

Would gamblers be obliged to write how much they won on their annual tax returns, like we're supposed to note purchases made online?

My guess is if you win/lose more than a certain amount, the gambling site will send a form to the IRS and to you at the end of the year detailing how much money you won/lost. This is what the brick and mortar casinos do in the U.S.

Summary Is Wrong!

[coolmoose25]

The summary stated that they would take 6% for state and 2% for Fed on each WAGER... That is incorrect... they are taking 6%/2% of your DEPOSIT in the online gaming account. If they took 6%/2% of your WAGERS, you'd be broke in no time!

Given this level of taxation, I'd be in favor, just for the legalization aspect alone... I'm generally not in favor of "feeding the beast" with more tax revenues, but if it gets me legal online gaming, then I'm okay with it.