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Yesterday, the House Committee on Ways and Means held a hearing on the legalization and taxation of Internet gambling proposed by Rep. Jim McDermott (D-Wash.) in the Internet Gambling Regulation and Tax Enforcement Act of 2010. McDermott introduced the bill as a companion to Rep. Barney Frank's (D-Mass) Internet Gambling Regulation, Consumer Protection, and Enforcement Act, which hopes to legalize and regulate the industry in the United States.
McDermott began the hearing by arguing that "Driving Internet gambling offshore has been a policy failure." He noted that Americans have already deposited an estimated $12 billion at offshore Internet gambling sites this year and that the government could be losing as much as $42 billion in tax revenue from the industry.
Surprisingly, it appears that the most contentious issue at the meeting was not the merits of regulating the industry but rather the idea of placing a tax on player deposits. Two supporters of Internet gambling Rep. Dean Heller (R-Nev.) and Rep. Shelley Berkley (D-Nev.) spoke out against any such taxation plan.
"I am unable at this time to support this special tax called for by Mr. McDermott's bill. The issue of taxation and legalization are separate and distinct," said Berkley who just moments before noted the many benefits of legalizing the practice.
Heller showed her agreement with Berkley's statement comparing the tax to someone walking into a department store with a $1,000 and walking out with nothing. When given a chance to respond to the argument McDermott stated, "When you put $1,000 in an online gambling account, you're not going to leave it there forever... A gambling operator is willing to pay a two percent deposit tax because he knows you're going to spend that money. The alternative to a deposit tax would be a gross gambling tax ... In talking to the industry, they say this is the best way to do it."
Many expressed their doubts however and debate over the issue continued throughout the day.
Other issues up for discussion included how to handle problem gambling and how to make sure that players will be protected from scams.
John Pappas, Executive Director of the Poker Players Alliance (PPA) seemed pleased about the meeting saying yesterday evening that, "Today's hearing underscores the increasing Congressional interest in a licensed and regulated online gaming environment."
No word yet on if and when the current bill could be up for vote.
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