Government Refuses To Collect $40 Billion Dollars In Taxes

Gambling News - January 19th, 2010 - Written By Glen

The world of online gambling has been existence since the earliest years of the World Wide Web, and is an industry that continues to thrive. In the United States it is also an industry that continues to be persecuted. A recent documentary on online gambling was aired through CNBC, showing both sides of the argument.

Online Gambling, according to CNBC, sees nearly $66 billion dollars in wagers on an annual basis. This money is shipped over seas in losses or back to the United States as winnings, but one fact remains solid - none of this money is taxed. Online gambling remains unregulated and untaxed, keeping much of this money outside of the United States economy. Estimates show that nearly $40 billion dollars can be generated over a ten year period through the use of online gambling.

One proponent of online gambling comes through Representative Jim McDermott, D-Wash., author of legislation that would tax and regulate online gambling, gave his opinion to CNBC. "Accept the fact that people want to gamble," said McDermott. "Let's admit that it occurs and then we will control it through the legislation and the rules and regulations written by the Treasury."

According to McDermott's legislation, licensed online gambling sites would have to pay a 2% tax on all deposits made into a player's account. Unlicensed operators would suffer a serious fate, a 50% tax rate on each deposit, which the player would be liable to cover. Licensing fees would also generate additional tax revenue.

"It's the only industry I know that says 'make it legal and tax us'," continued McDermott.

The opposition against online gambling had also given their out cry. Bob Goodlatte, R-Virg., an author of the Unlawful Internet Gambling Enforcement Act, or UIGEA, had spoken out against the industry. He claims that online gambling leads to criminal activity, citing a bank robbery that occurred due to a $10,000 dollar online gambling debt. Financial hardship was his leading reason behind the prohibition of online gambling.

According to Goodlatte, there is a number of online gambling sites operating in the United States, but this number is less than half of the amount that had existed prior to the passing of the UIGEA.

The UIGEA had been sneaked into law through the Safe Port Act, a series of legislation that was written to support Homeland Security.

Under the current regime, even winnings go untaxed. This could lead to player's being confused over their tax returns, especially those winners of massive tournaments through online poker rooms.

Opponents to online gambling claim that crime is naturally linked to gambling, but this does not take into fact the crime that stems from illegalized gambling. Not only are the gambling companies prosecuted, but also the payment processors - otherwise legitimate businesses. When gambling is made illegal, criminal enterprises typically take bets from players. These unscrupulous criminals, usually mobsters, may sometimes use violent force in order to collect their bets.

Many efforts are being made to legalize online gambling, though few steps have been successful. Representative Barney Frank has managed to postpone the full force of the UIGEA for six months, giving the Treasury time to consider their options pertaining to online gambling.

CNBC's report had shown both sides of online gambling, and even some of the websites still taking wagers from players in the United States. Millionaire Casino, Rushmore Casino, and Ultimate Bet poker were all included in the documentary.