US to make billions from web gambling laws

New US legislation will ensure that taxes are collected on regulated internet gambling activities

US Congressman Jim McDermott has introduced web gambling legislation that would collect billions of dollars in new revenues.

A recent analysis by PricewaterhouseCoopers estimates the revenues at between $8.7bn and $42.8bn over 10 years.

The Internet Gambling Regulation and Tax Enforcement Act 2008 would ensure that taxes are collected on regulated internet gambling activities, strengthening the provisions of an earlier version of the bill introduced last year.

The legislation also includes an enhanced reporting mechanism under which licensed gambling operators are required to provide each customer with an annual statement of winnings and losses.

It also establishes a two per cent licensing fee paid by the operator, and not the individual gambler.

The fee is designed to equalise the costs of operation in providing gambling services online, as opposed to bricks-and-mortar casinos providing gambling services in-person, and would be applied only to online operators.

"To be clear, these are not mostly new taxes: the bulk of the revenues generated would come from taxes required under existing law," said McDermott.

"This is simply a framework to collect taxes on existing activity that is currently unregulated, unsupervised and underground.

"Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service.

"These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation's priorities."

The legislation functions as a companion bill to the Internet Gambling Regulation and Enforcement Act that seeks to regulate internet gambling in the US.

"By not regulating and taxing internet gambling the US is forfeiting billions of dollars in revenue needed for critical government programmes," said Jeffrey Sandman, a spokesman for the Safe and Secure Internet Gambling Initiative.

"It is time for Congress to address this issue and put in place security controls to protect the millions of Americans who continue to gamble online despite the prohibition."