New Tax Bill Seeks to Regulate Online Poker in the US

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Players hoping for a clarification on the status of online poker in the US got some positive news this week with the introduction of new legislation that would regulate and tax online gambling.

The Bipartisan Tax Fairness and Simplification Act (S 3018), introduced February 23rd, 2010 by Senators Ron Wyden (D-OR) and Judd Gregg (R-NH), is legislation aimed primarily at reducing the tax burden of typical working class families on both logistical and economic levels.

“Senator Gregg and I are demonstrating that there is room for Democrats and Republicans to agree on tax reform,” said Senator Wyden in a release issued by Gregg’s website. “By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead. Businesses of all s will be in a better position to compete and grow jobs. Working families will keep more of their hard earned dollars and everyone will spend a lot less time filling out tax forms.”

The release makes no mention of the provisions concerning online gambling. Those provisions are essentially a counter-balance to the cuts proposed by the Senators, providing additional revenue to help offset the revenue lost via the reform the bill proposes.

The sections of the bill that deal with online gambling crib heavily from existing proposed legislation, including Barney Frank’s IGRCPE (HR 2267) and Jim McDermott’s IGRTEA (HR 2268).

You can review the entire bill here. The parts regarding online gambling are located around page 126 under the heading “Subtitle C—Internet Gambling Taxation and Regulation.” Cliff’s notes:

- Rooms would pay a licensing fee of 2% of all deposited customer funds. Unlicensed operators would be subject to a 50% fee.

- Rooms would furnish the USFG with complete transaction history on individual players.

- Regulation is a good idea, consistent with current law and in the best interests of consumers.

- Current rooms would probably have to pay significant back taxes to the US to be able to apply.

- State law / Indian compacts trump this law.

Advocates of regulation reacted to the bill’s introduction positively. “With so much media focus on the differences between Democrats and Republicans in Congress, this bipartisan initiative highlights the growing support on both ends of Capitol Hill for replacing the failed prohibition on Internet gambling with a system to regulate the industry, protect consumers and generate billions in new revenue,” said Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative. “We applaud Senators Wyden and Gregg for taking the initiative to address and drive this issue.”

PPA Executive Director John Pappas made this comment to PokerNewsDaily: “We’re pleased with it. The prospects of this legislation are unclear. This is a sign of things to come, perhaps seeing internet gambling being added as pay-for in other bills.”

Updates as events warrant.

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