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VOL. 37 | NO. 46 | Friday, November 15, 2013

Latest federal Internet gambling bill proposes tax

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LAS VEGAS (AP) — If Congress makes no progress on a national framework for online gambling this session, it won't be for a lack of legislation.

Two lawmakers introduced bills over the summer that would legalize some form of Internet gambling nationwide. Last week, Rep. Jim McDermott, a Democrat from Washington, introduced a bill that would tax federally-sanctioned online wagering.

The bill, dubbed the Internet Gambling Regulation and Tax Enforcement Act of 2013, could compel online operators to hand over up to 12 cents of every dollar players deposited. The federal government would take four cents. The state or tribe in which the gambler is playing could also opt to collect 8 cents on the dollar. McDermott introduced similar bills in 2010 and 2011, without success.

This time, the measure is meant as companion legislation to a bill introduced in June by Republican New York Congressman Peter King. King's proposal, called the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013, would open the door to all forms of casino games.

In July, Rep. Joe Barton, a Texas Republican, introduced a more limited bill that would pave the way for states to legalize online poker without fear of federal intervention. Barton's legislation, dubbed the Internet Poker Freedom Act, would only apply to poker and would allow states to opt out of the federal system.

Capitol Hill could see another legislative push for online gambling before the session is out. Democratic Sen. Harry Reid of Nevada, who has said the issue is one of the most important that his home state faces, is working on new legislation with his Nevada colleague, Republican Sen. Dean Heller.

Gamblers wanting to make wagers from the privacy of their homes have had few options in recent years. The federal government cracked down definitively on Internet gambling in 2011. But the same year, the U.S. Justice Department issued a ruling making online gambling legal so long as it's permitted on the state level.

Congress flirted with an online gambling bill in 2012, but industry infighting and partisan disagreement ultimately doomed it. When that legislation failed, states began moving ahead on their own.

Nevada, New Jersey and Delaware have now legalized some kind of online gambling, and legislatures in other states are weighing the issue.

Morgan Stanley predicts that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined: $9.3 billion.

Industry players hailed the McDermott bill as a sign that Congress may finally move forward with comprehensive Internet gambling regulation.

Michael Waxman, spokesman for Safe and Secure Internet Gambling Initiative, said that together, the year's gambling bills could create a fairer regulatory climate.

"With all of the fighting in D.C. over funding issues, you'd hope this opportunity to generate billions in economic activity and new government revenues will get serious consideration," he said.

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