US Rep Introduces Internet Gaming Tax Bill

This story was published more than 9 years ago.

US Representative Jim McDermott has introduced a new bill titled the Internet Gambling Regulation and Tax Enforcement Act 2013, which is set to would act as a companion bill to Rep. Peter King's online betting legalization bill.

McDermott's bill would create a 12% deposit tax that would be paid by online casino operators, with the federal government getting 4% and state governments getting 8%. That tax would be payable to the state or tribal area where the player is located when he or she makes a deposit.

Commenting on the bill, Michael Waxman of the Safe and Secure Internet Gambling Initiative said that the bill is "...a sensible approach to collect much-needed new revenue for federal and state budgets."

Additionally, Waxman said, “With the pending Internet gambling bills, Congress can put in place broad consumer protections and capture significant new government revenues without having to raise taxes. It’s shocking that Congress has decided to leave in place hypocritical laws that allow some forms of online gambling activity, such as betting on horse racing, but prohibits others, like poker and bingo. You’d be hard pressed to find another industry pleading for a chance to offer online the same activities permissible offline, and be taxed fairly to do so.”

The federal government has been unable and unwilling to process any type of internet betting legislation in the past, allowing for individual states to pass their own laws legalizing, regulating, and taxing the industry within their own borders. Thus far, the states of Nevada, Delaware, and New Jersey have passed and implemented their own internet betting laws, with more states likely to jump on board in the near future.

Many in the betting industry would prefer to see a federal solution, however, as they note that tax structures and regulations could be streamlined in order to provide a uniform standard for the industry to operate in.

"Already there is discussion of interstate compacts which would effectively mirror a fragmented federal regime, if ever agreement could be reached on the finer detail, but with duplicate costs in participating states. To date each state has approved varying offerings, suitability criteria, consumer protections and tax structures. The federal regime proposed by Rep. King would offer a uniform regulatory framework to control the activity and protect consumers. While Rep. McDermott’s bill would offer a uniform, effective tax regime," said Waxman.

The internet betting market is also growing and would provide a nice source of tax revenue for cash strapped states and the federal government. Financial services firm Morgan Stanley projects that internet betting will bring in $9.3 billion revenues by 2020, which is more than Las Vegas and Atlantic City combined.

Casino Listings will update this story as more developments arise.

About the author

Dustin Jermalowicz // News Editor
Dustin Jermalowicz
Dustin has a long-standing passion for gambling. He has been writing professionally on the subject and breaking industry news for Casino Listings since 2011. His favorite casino games include Blackjack, Poker, and Hi/Lo. A proud native of Detroit, Dustin currently lives in Michigan.