The June 1st deadline for the implementation of the UIGEA creeps ever closer, but pro-poker politicians on Capitol Hill continue to fight for the full legality of U.S. online gambling. Barney Frank is poker’s most powerful and high profile friend in Washington, but there are other lawmakers spearheading their own efforts. Rep. Jim McDermott (D-WA) has put forward an online gambling taxation bill designed to sit alongside Frank’s legislation. Installing fair and effective taxes over the online gambling industry is a vital step in moving internet poker into the arena of legitimate industry. However, these new tolls could mean that the average player pays more to play and deposit.
The Internet Gambling Regulation and Tax Enforcement Act (HR 4796) was created back in October and has now resurfaced with some key amendments. McDermott spoke to popular Washington paper The Hill about his new and improved submission, noting that the key change was to “make it possible for states to have access to online gambling revenue.” Under previous potential laws, the federal government received the bulk of the revenue, in an industry estimated to be worth around $42 billion over the next 10 years. Speaking back in October, McDermott was eager to focus on the value of opening up a new income stream for the cash-strapped U.S. administration. “Given the many critical government programs currently going under-funded or not funded at all, Internet gambling regulation should be given fair and immediate consideration. Prohibition in various guises has failed before and is failing once again. There is a better way.”
The key taxes created by these bills are centered on player deposits. Overall, 8% of every deposit made to an online gambling site would be sliced off as tax. The first 6% of that will go to state and tribal governments, while 2% goes into the pocket of the federal taxman. A small portion of this 2 percent is permanently earmarked for aiding foster children in the United States, Rep. McDermott’s pet charitable concern. “This legislation is a win-win for federal and state leaders,” claims McDermott, adding that these levies will “put to good use tens of billions of dollars in otherwise lost revenue.”
As far as online poker is concerned, poor and casual players will be the most heavily affected. Users who need to make regular deposits to top up their bankroll will be generating the bulk of taxation revenue, while winning players like Annette Obrestad – who famously claims never to have made a deposit on an online poker site – will be far better off. From the perspective of sites like Full Tilt and PokerStars, it is the losing players who generate the profit. It is speculated, therefore, that they may be prepared the pay the tax themselves on every deposit.
The bill has the go-ahead from the supremo of pro-poker legislation, Barney Frank. He has signed on as a co-sponsor, along with Reps. Earl Blumenauer (D-OR) and John Larson (D-CT). McDermott has promised that he will wait until Frank’s bill completes a mark-up before he starts to push through his own creation. HR 4796 is designed to work alongside Barney’s UIGEA-killer, which is tentatively scheduled to make its long awaited reappearance this Spring.