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Democrats Government The Almighty Buck The Internet Games

House Proposes Legalizing, Taxing Online Gambling 473

Posted by Soulskill
from the twenty-bucks-says-it-gets-shot-down dept.
eldavojohn writes "Passed in 2006, the Unlawful Internet Gambling Enforcement Act is set to go into effect June 1. New efforts by Democrats in the House of Representatives aim not only to stop that but to legalize and tax Internet gambling. Jim McDermott (D-WA), said, 'This is a huge boon to the state governments. If you look across the country you're seeing programs cut. In Arizona, they just cut out a program for children's health for 40,000 kids. Here's a source of money.' Basically, the bill proposes that for each state, a 6% cut would be taken from all wagers and go to the state in which the bet was made online, while federal would get 2%. They estimate in the next decade this would amount to $30 billion for state and tribal governments and $42 billion for the federal government in new taxes. Banks and casinos appear to be very much on board, while the usual crowd (Republicans, Focus on the Family, Think of the Children) gathered in opposition to the move."
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House Proposes Legalizing, Taxing Online Gambling

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  • by Anonymous Coward on Monday April 26, 2010 @02:12PM (#31986742)

    It's a tax on deposits made into an online casino. Huge difference.

  • Re:How? (Score:5, Informative)

    by Anonymous Coward on Monday April 26, 2010 @02:23PM (#31986924)

    Given that many of the current online gambling sites are run anonymously by organized criminal networks outside the US, how would collection or enforcement work?

    Many gambling sites that don't allow Americans are taxed and regulated in Europe. Some (such as PartyGaming) are traded on the London Stock Exchange. It's better for business if they are legitimate...they won't even hesitate to follow all the regulations.

    Would gamblers be obliged to write how much they won on their annual tax returns, like we're supposed to note purchases made online?

    My guess is if you win/lose more than a certain amount, the gambling site will send a form to the IRS and to you at the end of the year detailing how much money you won/lost. This is what the brick and mortar casinos do in the U.S.

  • Summary Is Wrong! (Score:5, Informative)

    by coolmoose25 (1057210) on Monday April 26, 2010 @02:40PM (#31987206)
    The summary stated that they would take 6% for state and 2% for Fed on each WAGER... That is incorrect... they are taking 6%/2% of your DEPOSIT in the online gaming account. If they took 6%/2% of your WAGERS, you'd be broke in no time!

    Given this level of taxation, I'd be in favor, just for the legalization aspect alone... I'm generally not in favor of "feeding the beast" with more tax revenues, but if it gets me legal online gaming, then I'm okay with it.
  • by MobyDisk (75490) on Monday April 26, 2010 @02:42PM (#31987234) Homepage

    John Hancock [wikipedia.org] just rolled over in his grave, since he fought a war based on the belief that you don't pay for freedom. [ushistory.org]

  • Re:How? (Score:5, Informative)

    by kramerd (1227006) on Monday April 26, 2010 @02:47PM (#31987306)

    Its more likely that in order to be legal, these would have to be US based gambling sites. You would receive tax documentation showing losses and gains on an individual basis. You might even have to prove your identity (scan your driver's license/passport) just to be allowed to gamble.

    From a gambler's perspective, most money lines are already in favor of the house. An even money bet (like the point spread bet or the under/over )might get you -103 to -112, depending on the place. While the payouts are even money, the odds of winning are not, and the house makes a profit by trying to get roughly equal amounts of betting on each possible outcome (adjusting the line as necessary). Professional gamblers are able to tell when the line is favorable to a specific bet. Adding a (6% state + 2% federal) tax on wagers (even though winnings would also be taxed as income whether you remove the winnings from your account or not) means that if you bet $110 on an even money proposition and are in the 25% tax bracket, your after tax winnings are only $69. In order to break even this way, you would have to win these propositions 61.5% of the time. The best gamblers win about that much, because the line is distinguished by people who bet on who they want to win, not on who is likely to win. Gambling sites are fantastic at finding where to draw the line to get the most action, but professional gamblers are not going to play just to break even.

    As the summary notes, it would end up being a source of money, just not for those participating.

  • by Anonymous Coward on Monday April 26, 2010 @03:09PM (#31987656)

    I have already moderated so posting anonymously. In re: your citation for the 450% increase in executive pay compared to workers, this study [temple.edu] (pdf) from Temple University states this on Page 2:

    To quantify the relative growth in CEO pay, in 1970 the average S&P 500 CEO earned approximately 30 times the pay of an average production worker. By 2002, this multiple had risen to almost 90 times the earnings of an average production worker in terms of CEO cash compensation (salary and bonus), and exceeded 360 times the earnings of an average production worker in terms of CEO total compensation (cash compensation, stock options and grants, and other compensation) (Hall and Murphy, 2003).

    This article [kyklosproductions.com] from Kyklos Productions and written by Jack Rasmus in 2004, quotes a survey by accounting firm Towers Perrin in which executive pay was 500 times that of the average worker.

    Finally, this article [heritageinstitute.com] from the Heritage Institute breaks out the disparity between average executive pay and average worker pay (up to year 2000 and only for 365 of the largest publicly traded companies) and shows that number to 531. When taken as the total executive pay in the U.S. compared to the total worker pay, the number is 262 times (as of 2005).

  • Re:Weakness? (Score:3, Informative)

    by MaskedSlacker (911878) on Monday April 26, 2010 @03:15PM (#31987754)

    And considering recent events on Wall Street, gambling houses actually give you a fairer deal.

    QFT, at least in Nevada. For casino floor games to be certified by the state they have to more or less gaurantee their odds--you know exactly what you're getting at craps, slot machines, video poker, or blackjack. Hell, the electronic gambling machines have stricter standards than electronic voting machines.

  • Re:what a great idea (Score:3, Informative)

    by lgw (121541) on Monday April 26, 2010 @05:00PM (#31989018) Journal

    In other words, we tax cigarettes now to deter you from smoking, but in the event that we can't do that, we use the increased revenues to pay for the increase in health costs that you rack up when you get lung cancer later. And yes, we pay for your lung cancer because you're likely on Medicare.

    This meme needs to die. Smokers do not have higher lifetime health-care costs. Everyone dies of something (usually something expensive), and lung cancer is an average-cost way to die.

  • by Dice (109560) on Monday April 26, 2010 @05:08PM (#31989104)

    We're past the point of petitions, actually, those have all been signed and ratified. The proposition will be on the ballot going out to California voters in November.

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