Will the US Leave $40 Billion in Tax Revenues On the Table?

According to the Safe and Secure Internet Gambling Initiative, a new tax revenue analysis announced by Representative Jim McDermott (D-WA), pictured left, estimates that regulating Internet gambling would generate between $8.7 billion to $42.8 billion in federal revenues over its first ten years. The findings of the analysis, prepared by PricewaterhouseCoopers, were provided to all Members of Congress by McDermott earlier this week.

“Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said Representative McDermott. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation’s priorities.”

Representative McDermott introduced the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607), which would tax regulated Internet gambling. According to McDermott,

the current approach, prohibiting Internet gambling through the Unlawful Internet Gambling Enforcement Act (UIGEA), has proved to be a failure. “Instead of this ineffective attempt to prevent adults from gambling over the Internet, we need a more sensible approach to protect consumers and ensure that revenues that now flow offshore stay here in the U.S. and are therefore subject to taxation.”

McDermott’s bill is a companion to the Internet Gambling Regulation and Enforcement Act (H.R. 2046), legislation introduced by Representative Barney Frank (D-MA) that would establish a licensing and enforcement framework for regulated Internet gambling in the U.S. The legislation would allow States to retain full control over the regulation of Internet gambling within their borders, applying additional taxes, protections and limitations as determined necessary and appropriate.

”By prohibiting a popular, recreational activity that many millions enjoy in the comfort of their own homes, the U.S. is forfeiting billions of dollars in revenue needed for critical government programs,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It is time for Congress to regulate and tax Internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue.”