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Rep. McDermott Introduces Poker Companion Bill

Tax Bill Would Provide Added Benefits for the States and Tribes

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Rep. McDermott's bill will make online poker regulation very enticing to legislators hungry for additional revenue.Rep. Jim McDermott (D-WA) introduced an updated version of his poker tax bill late last week, adding a new tax that would specifically benefit state and tribal governments if Congress passed legislation to explicitly legalize and regulate online poker.

“The major reason (for the updated bill) is to make it possible for states to have access to online gambling revenue,” McDermott told The Hill.

McDermott has introduced tax-related legislation on poker before, and this bill is designed to serve as a companion bill to Rep. Barney Frank’s bill that would regulate the industry.

Online gambling advocates hailed it as an important step in the battle to regulate online poker.

“This legislation is a win-win for federal and state leaders, providing an opportunity to regulate a currently offshore and underground industry, protect consumers, and put to good use tens of billions (of dollars) in otherwise lost revenue,” said Michael Waxman of the Safe and Secure Internet Gambling Initiative.

McDermott’s bill, called the Internet Gambling Regulation and Tax Enforcement Act (HR 4976), calls for a 6 percent tax on deposits that would directly benefit state and tribal governments. Just like his previous poker bill, there will also be a 2 percent federal tax — of which a quarter will be allotted to foster-care programs.

“I wanted to help out foster kids,” said McDermott. “I have always watched them get the short end of the stick.”

Poker supporters might grow as a result of McDermott's bill.The bill is estimated to raise approximately $30 billion for states and tribes over the next 10 years. Along with other taxes and federal licensing fees, online poker regulation is expected to generate $42 billion in federal revenue over 10 years, according to the Congressional Joint Committee on Taxation.

“At a time when many policy makers are faced with significant budget shortfalls, it is only common sense to choose regulation that will generate new revenues and create new jobs currently offshore as an alternative to layoffs, program cuts, or imposing broad-sweeping taxes that may further depress struggling families and businesses,” said Waxman.

Frank (D-MA) showed his support for McDermott’s legislation by immediately signing on as a co-sponsor. Rep. Earl Blumenauer (D-OR) and John Larson (D-CT) have also signed on as co-sponsors.

“Given the many critical government programs currently going under-funded or not funded at all, Internet gambling regulation should be given fair and immediate consideration,” McDermott said when he introduced his first poker-related piece of legislation of the session in October. “Prohibition in various guises has failed before and is failing once again. There is a better way.”

McDermott said he would move forward on his bill after Frank’s bill was marked up. Poker Players Alliance executive director John Pappas told Card Player that he was optimistic that would happen this spring.

 
 
 
 

Comments

terrybreedlove
almost 12 years ago

This bill just may have a chance due to the face that the government needs money and needs it badly. IF passed it should allow Uncle Sam to create a little revenue but mort importantly it will keep all the "want to make a name for myself locals and state politicians (aka KY)" from going off the reservation.

 
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mikeyb111
almost 12 years ago

With a 6% deposit tax and a rake of 3-5% no player will come out ahead.

 
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michawat
almost 12 years ago

If you are depositing that much that 6% will truly hurt your bottom line, then you're probably a losing player, right? Winning players(ala not me heh) don't have to deposit very often.

 
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momoney2
almost 12 years ago

It's interesting that they are trying to catch the money on the way in rather than on the way out. If the sites pay the tax on the deposit, then that doesn't hurt or deter the little guy from wanting to make that initial deposit. BUT if the little guy has to incur a small deduction from his deposit, he may feel that it is not worth making the deposit. Though on a $50 deposit, it would only be a $3 dedcution.
I would guess the reason for collecting the money on the way in is that more players make deposits than withdrawals, i.e. most players are losing players. I just hope this bill won't hit rakeback deposits as well. That's all that is keeping me ahead. ;-)

 
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MoneyWheels
almost 12 years ago

It would be cool if every new tax went directly to paying down our deficit. Unfortunately it will just get spent on more things we "need" ....

 
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TXMaxx
almost 12 years ago

First of all it is 6% plus 2% for the feds, then when cashing out there would be income tax based on gains over deposits. THEN, how many of the underage players (maybe 25% of the total) would be cut off from play? This would only work if the so called random card generators would also be regulated and not set up to make the "house" unfair profits.

 
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JamesScou
almost 12 years ago

There would be more sites for U.S. players to play on if regulation is passed, thus creating more competition, that means sites will do anything to attract and keep its players. I wouldn't worry about us players losing anything other being forced to pay taxes on the winnings. The player pool would increase also because more people would be playing if they felt it was "legal. I hope it happens soon so the fishies can come out and play!!!

 
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deadmeat82
almost 12 years ago

The 6% and 2% incoming taxes would probably be covered by the site, and maybe hit your MGR and rakeback, but wouldn't really hurt you. It'd be like payment processor fees now. And as JamesScou said, it would drag the fish and weekenders that are afraid to play online due to legality issues out making regs very happy. I hope to see this bill passed into law.

 
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Uncle_Harvey
almost 12 years ago

How aboiut this for a law. Leave us the hell alone. We should not have to pay a tax for every pleasure. Drinking- tax, smoking -tax, tanning - tax etc. etc.

freedom anyone?

 
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JamesScou
almost 12 years ago

the lower class people that rely on government assistance for everything they do causes the government to find ways to make money. that's life as long as they help the lower class.

 
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