USA: Online Gambling Taxes – A Jackpot for Congress
Posted on May 19, 2010 by John Trevors for Luckyroom.com
Bloomberg’s Businessweek has posted an article regarding the online gambling taxation and how the unexpected income can be used for many social tasks. Following up with the topic mentioned on Bloomberg it seems like Jim McDermott is seeking ways to impose taxes on online poker and other internet gambling activities which can produce revenue of over $42 billion within a 10 years period from what he and his team, have calculated. The Washington Democrat Representative believes that by issuing a frame law that will allow people to play online poker and casino games on sites that are licensed by the Treasury Department will boost the income of states up to $30 billion in addition to the $42 billions that will go directly to the country. The proposal is to be considered today May 19th and if there is a positive outcome, US residents will be allowed to gamble on internet on specific sites quit soon.
The proposal is enjoying vast support from Las Vegas Harrah’s Entertainment Inc, and similar groups, which are lobbying Congress to legalize online gambling. The legalization of Online Gambling under a law frame that insures fairness and security will stop US residences from wagering money to companies taxed outside the USA using offshore companies.
Michael Waxman – a spokesman for the Washington-based Safe and Secure Internet Gambling Initiative – stated that “Online gambling gives Congress “a huge new source of revenue that is just sitting there on the table”. However, this is only one side of the coin as there are many who oppose to any form of legalization to online gambling. One of them is Chad Hills who claimed that “tax gains would be offset by social costs, such as gambling addiction, Online betting is “the most predatory, addictive and invasive form of gambling,” Hills said. “If people are sitting around in their pajamas on their computer in their living room playing on multiple Internet sites, what is this going to do to the United States?”
Despite the financial crisis and the economic instability, the US offshore internet gambling market is expected to climb to $5.7 billion in 2010 from $5.4 on 2009. The U.K based H2 Gambling Capital which supplies the data also claims that if there is legalization of internet gambling the US market can grow up to $24 billion within a five years period. The biggest offshore gambling sites for U.S. players include PokerStars, based in Isle of Man, and Full Tilt Poker, based in Ireland, according to H2.
McDermott’s measure depends on passage of legislation proposed by Representative Barney Frank of Massachusetts – chairman of the House Financial Services Committee to end a ban on most Internet gambling actions. As each state is almost independent to draw the line of what is allowed to online gambling and what it is not, people will always find ways to play online poker, online casino, bingo online and place bets online. There is a need of a law framed by the required safeguards which will protect against underage and compulsive gambling as well to prevent people to place bets online on states that prohibit. McDermott’s proposal is clear as the online gaming companies would have to pay a 2% tax to the federal government and a 6% tax to the states. Additionally, the federal treasury will collect additional taxes from the winnings of the players plus the issued gambling licenses.
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