Federal bill to tax internet gaming reintroduced by Rep. McDermott

Rep. Jim McDermott has reintroduced a bill to the US House of Representatives to regulate and tax internet gambling.

The Internet Gambling Regulation and Tax Enforcement Act was first introduced by McDermott in February 2008 and has been reintroduced in each subsequent year.

HR3491 would amend the Internal Revenue Code of 1986 to regulate and tax internet gambling, and is a companion bill to HR2282, legislation sponsored by Congressmen Peter King and Capuano, which would license and regulate online gambling at the federal level.

“This bill would generate new streams of revenue for the federal government as well as state and tribal governments, create an estimated 30,000 new jobs in America, and provide funding for children in foster care and for historic preservation and the arts,” said Rep. McDermott following its introduction Thursday.

 “Under my legislation, the federal government along with state and tribal governments would recognize a new, untapped stream of revenue,” continued Rep. McDermott. “The revenue could help jurisdictions fund needed services at a time when many governments are struggling with tightening budgets.

“Online gambling operators would pay a tax to the federal government as well as state and tribal governments equal to a percentage of the total deposits they collect. The money paid to the governments would not be deducted from the accounts of online gamblers.”

McDermott said that operators would pay a tax to the federal government equal to four per cent of the funds deposited by players who reside inside the US, as well as a tax to state and tribal governments equal to eight per cent of the funds deposited by individuals residing within their jurisdiction.

“A quarter of the revenue raised by the bill would go to providing assistance to the nearly 500,000 children in America who live in foster care,” he said. “The funds generated would be directed at helping foster children through grants to each State to carry out educational and transitional support for individuals who are or were in foster care.

The bill also sets aside 0.5 per cent for historic preservation and the arts.

“The future is happening. People in small towns and big cities across America are gambling online either legally under a patchwork of inconsistent state laws or illegally without any consumer protection,” said Rep. McDermott. “We have to deal with this issue. If we regulate online gambling, we can create jobs, generate revenue, and expand aid to children in foster care.”

The full text of HR 2230 is yet to be published following its introduction Thursday, but has been referred to the House Ways and Means Committee and the House Education and the Workforce Committee.