Jim McDermott Unveils Internet Gambling Tax Act
Representative Jim McDermott (D-WA) introduced legislation on Wednesday to tax internet gambling in the US. The bill, HR 2268, is the companion legislation to Representative Barney Frank's (D-MA) new legislation to legalize and regulate online gambling as well as online poker.
While Frank's legislation lays out the regulatory framework for legal online gambling in the US, McDermott's legislation tackles the issue of taxation.
"We are losing billions of dollars in federal and state taxes every year because a prior Administration and its supporters drove legitimate U.S. online gambling off-shore by passing an ill-conceived late-night amendment in Congress that has done nothing except make Americans more vulnerable to scams when they wager online and cost us billions in lost revenue," Rep. McDermott said.
The Internet Gambling Regulation and Tax Enforcement Act of 2009 (PDF) proposes to tax all deposits made to licensed online gambling operators at 2%. This tax is paid for by the operator and is not taken out of the player's account. However, the bill also takes a hard line with unlicensed operators. Deposits made to those operations will be taxed at the rate of 50% and the player will be liable for those taxes.
The bill also proposes generating income through licensing fees for the casinos and poker rooms. Also, like winnings from land casinos under current law, online gambling winnings would be liable for taxation as income. Casinos and poker rooms would provide monthly statements to a player showing net wins or losses allowing players to monitor their finances.
The prospect of owning up to taxes on poker income may have many poker players feeling conflicted. Such is the price of regulation it would seem.
The text of the bill can be found here (PDF).