Poker News Daily

Senators Ron Wyden and Judd Gregg Introduce Internet Gambling Legislation

On Tuesday, Senators Ron Wyden (D-OR) and Judd Gregg (R-NH) introduced S 3018, the Bipartisan Tax Fairness and Simplification Act. Among other topics, the bill establishes a framework to tax and regulate internet gambling in the United States.

One of the first entities to report that major legislation had emerged in the Senate was the Safe and Secure Internet Gambling Initiative. The organization’s spokesman, Michael Waxman, commented in a press release, “With so much media focus on the differences between Democrats and Republicans in Congress, this bipartisan initiative highlights the growing support on both ends of Capitol Hill for replacing the failed prohibition on internet gambling with a system to regulate the industry, protect consumers, and generate billions in new revenue. We applaud Senators Wyden and Gregg for taking the initiative to address and drive this issue.”

The bill is focused primarily on mainstream tax breaks, including eliminating the Alternative Minimum Tax and reducing the number of individual income tax brackets from six to three: 15%, 25%, and 35%. Under the bill, the standard tax deduction would triple. Text found on Gregg’s Senate website notes, “These simplifications alone will make it possible for most taxpayers to file a simple one-page 1040 form and in an effort to make paying taxes even simpler, individuals and families can request that the IRS prepare a tax return for them to review and sign.”

Other provisions of the bill include allowing a large percentage of small businesses to allocate capital and inventory expenses to a single accounting year. In addition, a flat tax rate of 24% would be imposed on all businesses as opposed to the current tiered system. According to the Senator’s website, corporate tax rates would tumble by about 30% as a result, putting American companies at a competitive advantage over their overseas counterparts.

Subtitle C of S 3018 focuses on internet gambling and borrows language from Congressman Barney Frank’s (D-MA) HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The measure, which boasts 65 co-sponsors on both sides of the aisle, was discussed in the House Financial Services Committee in December. Additionally, S 3018 incorporates Congressman Jim McDermott’s (D-WA) HR 2268, the Internet Gambling Regulation and Tax Enforcement Act. HR 2268 boasts five co-sponsors and taxes licensed internet gambling outfits at a rate of 2% of deposits. S 3018 adopts the same rate.

In August, Senator Robert Menendez (D-NJ) introduced S 1597, which up until today had been the central rallying point for the online poker industry in the Senate. The bill, dubbed the Internet Poker and Game of Skill Regulation, Consumer Protection, and Enforcement Act, specifically calls out online poker as a legal activity. Menendez’s bill has yet to procure any co-sponsors in the Senate and was not discussed in committee.

In October, the Joint Committee on Taxation revealed that over $40 billion could be raised from taxing and regulating the internet gambling industry over a 10-year period. Previous estimates from third-party companies like PricewaterhouseCoopers had pinned the number above $50 billion. The move to license internet gambling in S 3018 may be meant to offset the downturn in government revenue associated with other provisions of the bill.

Wyden had previously introduced an amendment calling for revenue derived from internet gambling to be used to fund sweeping health care reform. Ultimately, the Senator withdrew his proposal and the health care initiative failed to materialize. At the time, the reform had a price tag of nearly $1 trillion. Wyden and Gregg’s S 3018 mirrors the Tax Reform Act of 1986, which was passed during the Reagan Administration. The duo expects to reach “most families” with under $200,000 in annual household income.

John Pappas, Executive Director of the Poker Players Alliance (PPA), told Poker News Daily that while the organization was still digesting the tax implications of S 3018, seeing internet gambling addressed was refreshing: “We’re pleased with it. The prospects of this legislation are unclear. This is a sign of things to come, perhaps seeing internet gambling being added as pay-for in other bills.”

Stay tuned to Poker News Daily for the latest from Capitol Hill.

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