Rep urges Congress to permit net gambling

Jim McDermott
Jim McDermott - another voice of reason in Congress.

Representative Jim McDermott (D-Wash.) sent a letter to his fellow U.S. members of Congress this week urging them to support legislation that would regulate and tax online gambling in the United States.

U.S. law currently aims to prohibit U.S. residents from gambling on the Internet, and McDermott points out that governing what adults choose to do online is difficult.

"As a result of the prohibition on Internet gambling, some gamblers are electronically moving their money offshore to use foreign-devised schemes that enable online wagering," he says in the letter.

The entities that facilitate these transactions are free from U.S. regulation and taxation. The U.S. residents who are gambling and playing poker online also don't report their winnings to the IRS either because online gambling is illegal.

Leaving the industry illegal in the United States costs the nation billions of dollars in uncollected taxes.

McDermott provided an analysis done by PricewaterhouseCoopers that shows just how much federal revenue is being lost by not taxing and regulating online gambling.

The report estimated that between $8.7 billion and $42.8 billion could be generated from online gambling taxes within the first 10 years of the proposed legislation being implemented.

"These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation's priorities," McDermott said.

He also clarified that most of these tax revenues wouldn't be considered "new" revenue. Instead the bulk of tax revenue that would be generated would be from taxes required under existing laws that just aren't being paid because online gambling is illegal.

McDermott introduced the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607) in 2006, which would tax and regulate Internet gambling. His bill is a companion bill to Congressman Barney Frank's Internet Gambling Regulation and Enforcement Act (H.R. 2046).

Frank's bill would establish a licensing and enforcement framework for regulated Internet gambling in the United States.

"Instead of this ineffective attempt to prevent adults from gambling over the Internet, we need a more sensible approach to protect consumers and ensure that revenues that now flow offshore stay here in the U.S. and are therefore subject to taxation," McDermott said.

"H.R. 2607 and H.R. 2046 would regulate Internet gambling to make it safe for American consumers and ensure that tax revenue that is currently foregone is collected."

Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative, reinforced what McDermott said about online gambling.

"By prohibiting a popular, recreational activity that many millions enjoy in the comfort of their own homes, the U.S. is forfeiting billions of dollars in revenue needed for critical government programs," Sandman said.

"It is time for Congress to regulate and tax Internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue."

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