US Gambling Bill Introduced

by Mike Godfrey, Tax-News.com, Washington

26 May 2010

The leading poker advocacy group, with more than one million members nationwide, has welcomed proposed new legislation which would tax, license and regulate the online gaming environment in the United States.

Commenting on the Internet Gambling Regulation and Tax Enforcement Act of 2010, Executive Director of the Poker Players Alliance (PPA), John Pappas, said that the proposals "underscore the increasing Congressional interest in a licensed and regulated online gaming environment."

"While the robust consumer protections provided by regulation are the biggest selling point, in the current economic environment, additional tax revenue derived from a licensed industry is certainly appealing [for the government] as well,” he added.

"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,” Pappas observed.

According to a summary of the legislation, the Act would:

• Impose an Internet gambling license fee on Internet gambling operators and an additional tax on unauthorized bets or wagers;
• Require such operators to keep daily records of gambling deposits and file informational returns identifying themselves and the individuals placing bets or wagers with them;
• Require operators to pay state and Indian tribal governments a 6% fee on gambling deposits;
• Require withholding of tax on net Internet gambling winnings and on the gross amount of winnings of nonresident aliens; and
• Extend the excise tax on wagers to include wagers placed with the United States or any commonwealth, territory, or possession by a US citizen or resident.

Concluding Pappas said:

"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 US.

"We look forward to a successful mark up of legislation to license and regulate online gaming in July in the House Financial Services Committee."

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