Today, Congressman Jim McDermott (D-WA) released a study by the Joint Committee on Taxation (JCT) revealing that up to $41 billion could be generated by regulating and taxing the internet gambling industry over a 10-year period.
This is one of several studies to be released by various outfits, but is the first to be handed down by an agency of the United States Government. On the importance of the JCT’s findings, McDermott commented in a press release distributed on Thursday, “I suspect that many of my colleagues… will take more interest in this issue once they see $41 billion available that they can match up with any number of worthy programs.” Being debated on Capitol Hill is major health care reform, one social program that could conceivably be funded through internet gambling.
McDermott continued, “I would suspect it’s only a matter of time before Congress appropriately moves to regulate the industry in order to protect consumers and reverse the flow of billions of dollars currently lost offshore as Americans gamble billions online despite attempts to prohibit the activity.” In May, the Washington Congressman unveiled HR 2268, the Internet Gambling Regulation and Tax Enforcement Act. The measure imposes a fee of 2% of deposits on licensed internet gambling operators.
HR 2268 is a companion bill to Congressman Barney Frank’s HR 2267, which establishes a comprehensive framework for companies to solicit U.S. customers. The two bills were introduced on the same day and HR 2267 is up to 62 cosponsors on both sides of the political spectrum. Safe and Secure Internet Gambling Initiative (SSIGI) spokesperson Michael Waxman told Poker News Daily, “This is a very significant development in support of the push to regulate the industry. We would expect that there will be more conversation and more interest in internet gambling regulations as Congress is attempting to figure out funding for health care and other various programs.”
Today, Democrats in Congress unleashed health care reform that comes with a price tag of nearly $900 billion. While not able to cover the full amount, legalizing internet gambling could, in theory, put a dent in the price tag. The JCT’s analysis does not include online sports betting, which is barred in Frank’s legislation. Moreover, the findings assume that states will not opt out of HR 2267. A February study by the U.S.-based firm PricewaterhouseCoopers revealed that up to $52 billion could be raised by taxing internet gambling companies over a 10-year period.
On the significance of a $4 billion per year revenue stream when programs like health care run over 200 times that total, Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan explained, “It’s realistic to see it packaged with a number of revenue enhancers. As a standalone, in my opinion, it’s not enough money to be able to get people off the mark who have been against this in the near-term.”
Information released today by the SSIGI noted that Frank planned to hold a markup hearing on HR 2267, but the House Financial Services Committee has released no official information. For the balance of the week, Frank’s committee will be bogged down in discussion of systematic regulation, overdraft protection, and investor protection. The grizzly state of the U.S. economy has been the committee’s main focus since September of 2008.
Frank has also introduced HR 2266, the Reasonable Prudence in Regulation Act. The measure delays industry compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year. As it stands, the financial services industry in the United States must come into full compliance with the 2006 law by December 1st, which is just five weeks away. The Poker Players Alliance (PPA), the industry’s main lobbying force, has been working feverishly to delay the deadline through other means, including appealing directly to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.
The JCT study assumes that wagering taxes will be levied and that HR 2267 will be amended so that internet gambling companies doing business in the United States must also be incorporated in the United States. Read the full internet gambling study.
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