US to Tax Online GamblingPublished July 25, 2008 by OCR Editor
The days of tax-free gambling may be over for US punters as the federal government eyes online gamblers as fair game for tax revenue.
Tax revenue crusade
James McDermott, a democratic congressman from the state of Washington, has recently submitted a bill to tax the winnings of online gamblers. The act, entitled "Investing in our Human Resources Act of 2008" is seen as killing two birds with one stone. The first bird comprises an attack on gambling, seen by many as evil and corrupt. The second bird involves estimated tax revenue of $40 billion that would be spent on a series of social and educational programs. The tax money would be earmarked for educational and job-training programs for former foster care individuals as well as programs for those workers trapped in industries seen as outdated or uncompetitive.
This bill is McDermott's second attempt at taxing online gambling. His earlier effort took place in 2007 when he authored the late, lamented Internet Gambling Regulation and Tax Enforcement Act, or IGRTEA. This bill was bandied about by various members of Congress until it was finally rejected as unworkable. Further attempts at penalizing online payment systems used by members of the online gambling fraternity have likewise run their course making little impact on the gaming industry.
Lip service from the gambling fraternity
Deciding to opt for a diplomatic course, members of gambling organizations have cautiously welcomed McDermott's bill. Not wanting to fall foul of any move by Congress to raise taxes for worthy causes, senior officials of organizations such as the Poker Players Alliance (PPA) have given the bill a favorable nod. John Pappas, the Executive Director of the PPA stated, "McDermott is on the tax writing committee in the US House of Representatives and he's been an advocate for extracting revenue from Internet gambling. The PPA hasn't had an opportunity to review his proposal thoroughly, but we like the out-of-the-box thinking to be able to connect the benefits of legislation to a worthy cause."