On Wednesday, the House Ways and Means Committee held a hearing to examine tax proposals related to internet gambling. Taking center stage was Congressman Jim McDermott‘s (D-WA) HR 4976, the Internet Gambling Regulation and Tax Enforcement Act. The bill was introduced in March and just picked up its fourth co-sponsor, Congressman Bill Pascrell (D-NJ). A bevy of organizations have weighed in on the hearing, including the Poker Players Alliance (PPA), the industry’s main lobbying voice.
One of the big discussion points during Wednesday’s hearing surrounded the merits of the 2% federal tax on deposits along with a supplemental deposit tax designed to raise money for states and Indian tribes. The PPA's Executive Director, John Pappas, stressed to players that internet gambling operators are ultimately responsible for paying the added taxes: “It is important to note that this bill would not levy a new tax on poker players. Rather, it requires each licensed internet gambling operator to pay a licensing fee – nothing would be deducted from a player’s deposit. Individuals would be required to pay annual income taxes on their net winnings, just like players who collect winnings in land-based casinos do today.”
The PPA wasn’t all rosy following the proceedings, however, and the language of HR 4976 is far from finalized. Accordingly, the one-million member strong lobbying organization is seeking to remove a potential fine online poker players may face: “The PPA is working to remove language from the bill that would fine players who play on unlicensed sites, as we firmly believe the unlicensed sites should bear the full consequences of not obtaining a license in the U.S.”
One of the more important tidbits to come out of Wednesday’s hearing was that the House Financial Services Committee will likely hold a hearing in July to mark up Congressman Barney Frank‘s (D-MA, pictured at right) HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The bill boasts 69 co-sponsors on both sides of the aisle and creates a comprehensive licensing and regulatory framework for internet gambling companies to solicit real money customers from the United States.
HR 4976 is a companion bill to HR 2267, which in itself does not include any tax mechanism. On the prospects of marking up HR 2267 in two months, Pappas commented, “We thank the [Ways and Means] Committee for holding this important hearing. We look forward to a successful mark up of legislation to license and regulate online gaming in July in the House Financial Services Committee.” July’s hearing has not yet been scheduled.
Up to $72 billion over a ten-year period could be raised from legalizing and regulating internet gambling in the United States. In addition, over 30,000 jobs could be created, which may help put a dent in the soaring unemployment rate.
Praising the legislation’s job-creation benefits was Safe and Secure Internet Gambling Initiative spokesperson Michael Waxman, who commented in a press release, “With our national unemployment rate at more than 10% and all but six states anticipating budget shortfalls for the 2011 fiscal year, this legislation is a win-win. It’s not everyday that the opportunity to generate billions of dollars and creates tens of thousands of jobs comes along. Congress should seize the opportunity that this legislation presents and move forward in regulating internet gambling.”
Check out our recap of the House Ways and Means Committee hearing. Also, visit the Poker Legislation forum to keep up-to-date on the latest from Washington, D.C. and around the world.