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Tony Batt

Bill cites 43 billion reasons internet gambling

6 March 2008

WASHINGTON, DC -- As bills trying to roll back an Internet gambling ban languish in Congress, another measure was introduced this week claiming that a tax on online gambling could produce up to $43 billion over 10 years.

Rep. Jim McDermott, D-Wash., unveiled legislation Tuesday calling for federal regulation and taxation of Internet gambling.

A spokesman for an Internet gambling advocacy group said the legislation would strengthen provisions in an earlier version proposed by McDermott in June.

"It is time for Congress to address this issue and put in place security controls to protect the millions of Americans that continue to gamble online despite the prohibition," said Jeffrey Sandman, a spokesman for the Safe and Secure Internet Gambling Initiative.

Taxes on Internet gambling could raise between $8.7 billion and $42.8 billion in a decade, according to an analysis by the accounting firm PricewaterhouseCoopers that McDermott released last month. But Frank Fahrenkopf, president of the American Gaming Association, questioned those numbers.

Fahrenkopf said many states are unlikely to authorize Internet gambling even if the federal ban is repealed.

McDermott spokesman Mike DeCesare said the tax revenue estimate was made so wide in an effort to be credible.

"I still think the odds are very long that a bill (to repeal the Internet gambling ban) will pass in this Congress," Fahrenkopf said.

Fahrenkopf said he is troubled by the prospect of federal regulation and federal taxation of the gaming industry.

"This is a matter for the states, not the federal government," Fahrenkopf said.

McDermott's original bill had only one co-sponsor -- Rep. Neil Abercrombie, D-Hawaii. The bill he offered Tuesday has no co-sponsors.

Three other bills to dilute the Internet gambling ban, which was enacted in the closing days of Congress in 2006, remain stalled.

McDermott's bill would supplement legislation introduced last April by Rep. Barney Frank, D-Mass., that would require the Treasury Department to regulate the $15 billion Internet gambling industry.

About 23 million gamblers are wagering on about 2,500 Web sites.

"The Frank bill is the lead bill, and it must move first before Jim's legislation," DeCesare said.

So far, 46 members of the House have co-sponsored Frank's bill.

Frank, who is chairman of the House Financial Services Committee, conducted a hearing on Internet gambling in June, but nothing has happened since.

The Internet gambling bill with the most co-sponsors is a measure by Rep. Shelley Berkley, D-Nev., calling for a one-year study of Internet gambling by the National Research Council of the National Academy of Sciences. It has 68 co-sponsors.

The House Judiciary Committee conducted a hearing in November on Berkley's bill and another bill by Rep. Robert Wexler, D-Fla., to exempt poker and other "games of skill" from the Internet gambling ban.

Wexler's bill has 21 co-sponsors.

The judiciary committee has not followed up on either bill.

Bill cites 43 billion reasons internet gambling is republished from