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:Tendency to agree...

[Red Flayer]

The profits won't be going to a US-based casino, unless the operators are idiots. They'll put the business in a tax-sheltered place like the Cayman Islands. There's no compelling reason to have an internet-only business located in the US.

In general, though, I'd be a little more concerned with the level of the vig, and the fact that they want to assess it at the wager level. At competitive levels of play, the return for the good players is not huge -- it's dwarfed by this tax. Online gambling would become "everybody loses, except the taxing authority". I think it's too high, and should be at most 1-2%. Especially at the wager level -- I wouldn't mind so much if the tax was only assessed on cash payouts.

I think what they're looking at is wagers on events -- bookmaking -- not competitive games like poker.