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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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  • Tendency to agree... (Score:5, Interesting)

    by ls671 (1122017) * on Monday April 26, 2010 @02:06PM (#31986672) Homepage

    I have a tendency to agree. Despite the social problems gambling brings. Just like alcohol, it seems better to tax it instead of watching the profits go somewhere else.

  • by lcoscare (1121345) on Monday April 26, 2010 @02:11PM (#31986724)
    why "Republicans" are against this?? Aren't they supposed to be in favor of small goverment and fewer regulations? This is exactly why the tea parties are becoming so big, we should be able to do what we want with our own money in a free society, as long as it doesn't harm anyone else. To paraphrase Thomas Jefferson Who cares? "It neither picks my pocket nor breaks my leg."
  • by 2obvious4u (871996) on Monday April 26, 2010 @02:12PM (#31986746)
    I agree too, I would rather pay for freedom than either not have it or have to fight for it.
  • by flitty (981864) on Monday April 26, 2010 @02:17PM (#31986826)
    Agreed. Opening such activities to sunlight allows for better regulation and restrictions.
  • Poor Tax (Score:4, Interesting)

    by Alaren (682568) on Monday April 26, 2010 @02:19PM (#31986872)

    Gambling is a fascinating issue; tar-and-feathering opponents as the "usual crowd" is pretty facile.

    For example, "the lottery" has regularly been shown to basically be a "poor tax." Isn't there a "usual crowd" who speaks out against regressive taxation? Aren't they leftists?

    The relative value of gambling is a worthwhile discussion (insurance is a kind of gamble, as is the stock market, right?). Arguments that it is just "another form of entertainment" have real analogues to the arguments we have about MMORPGs and the relative "addiction factor" involved there. The "let's make some revenue appear out of nowhere" argument is also an interesting one to have when talking about legalizing and taxing certain recreational drugs.

    Lots of interesting issues. Let's avoid turning every single proposal into a political witch-hunt, okay?

  • by CyberBill (526285) on Monday April 26, 2010 @02:21PM (#31986892)
    Agree. People are already playing online poker. It is better to have our government reap the tax benefits and for the profits to go to a US-based casino rather than just shipping the money outside of the country.
  • by MikeRT (947531) on Monday April 26, 2010 @02:21PM (#31986902) Homepage

    I am actually more of a social conservative than most of these groups, and I fully support legalizing and taxing this. If you want people to be responsible, they have to have freedom. It's just that simple. A society where people don't engage in victimless crimes because the state is putting a gun to their head isn't a more moral society, it's just one where we pretend that everything is hunky dory.

  • Regulation (Score:3, Interesting)

    by wjousts (1529427) on Monday April 26, 2010 @02:22PM (#31986916)

    It seems to me that it would be inherently hard to monitor online gambling to ensure that the people running the online casino are actually playing fair. After all, it would be fairly trivial to set up a website to take peoples money but behind the scenes code it such that nobody ever wins. Of course, if nobody ever wins anything, they'll eventually stop playing, but you could easily set rules to feedback just enough money to keep them interested. Maybe return 80 cents on the dollar, but have code make sure that nobody can ever break even.

    How would the federal government handle this? Do they insist on seeing the full source code running on every online casino site? If they do, how do they know the code the casino gives them is the actual production code? Basically, it would be too easy to load the dice at an online casino and take everybody's money.

    This isn't a comment on the morality of gambling in general, or whether or not it's a good thing. It just seems like it'll be too easy to rip people off using some [not even that] clever coding.

  • Re:Regulation (Score:3, Interesting)

    by wjousts (1529427) on Monday April 26, 2010 @02:28PM (#31986986)
    Just replying to myself to add. I guess there isn't a problem for online casinos taking bets on, for example, sports. Something they have no control over. I also guess there's no problem if an online casino works only as a venue for players to bet against each other (example: poker) with the casino taking a cut (unless they hire their own players who are given some additional advantage by the code running the game). I was thinking more along the lines of online roulette, online slot machines, or online craps.
  • Video Game Assets (Score:3, Interesting)

    by kiehlster (844523) on Monday April 26, 2010 @02:29PM (#31987008) Homepage
    How might such a law affect video game assets in the face of taking gambles? If I buy, with real money, a bunch of in-game loot and then take a gamble on successfully defeating the other team [slashdot.org], or open up a second-life gambling casino [alphavilleherald.com], what would the government tax me on? my video game fees? my profits from selling loot?
  • Re:How? (Score:2, Interesting)

    by Skuld-Chan (302449) on Monday April 26, 2010 @02:29PM (#31987010)

    Its like I had a friend who was a missionary in Italy - he said the church would only rent from people who had paid all the taxes on property so nothing was illegal (and other necessary paperwork). He quickly found that the only people who did this were members of organized crime families.

    Which worked well in some regards - people didn't park in front of there place, it was really well kept etc.

  • by IndustrialComplex (975015) on Monday April 26, 2010 @02:31PM (#31987038)

    I am actually more of a social conservative than most of these groups, and I fully support legalizing and taxing this. If you want people to be responsible, they have to have freedom. It's just that simple. A society where people don't engage in victimless crimes because the state is putting a gun to their head isn't a more moral society, it's just one where we pretend that everything is hunky dory.

    I'm not in favor of taxing it for the sake of increasing government revenue.

    However I agree with your second statement.

    In a world without temptation or sin, none are righteous.

  • by martas (1439879) on Monday April 26, 2010 @02:32PM (#31987070)
    totally. next up, weed *fingers crossed*
  • Re:what a great idea (Score:3, Interesting)

    by Locke2005 (849178) on Monday April 26, 2010 @02:39PM (#31987188)
    The big money is all in gambling, prostitution and drugs... 1 down, 2 to go!

    But seriously, when a voluntary activity adversely affect society, criminalizing it won't stop the harm. The best way to provide funding to ameliorate the harm caused is to tax the hell out of it, which has the side effect of also discouraging it.
  • by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Monday April 26, 2010 @02:44PM (#31987274) Homepage Journal

    Basically, the bill proposes that for each state, a 6% cut would be taken from all wagers

    First, what? Of all wagers, win or lose? Right now, you can hypothetically wager for an indefinite amount of time if the odds of winning are 50/50 (which they aren't but play along) and you never fall to zero. If each transaction is taxed, then you lose 6% on each hand, automatically, no matter what? I hope that's just poorly written.

    Second, I'm against expanding gambling. Proponents point to Las Vegas and think that Spitsville, Arkansas will be just like that if only they legalize Keno. Well, no. What always happens is that the people who can least afford new, expensive habits end up losing everything. Crime goes up. Social service costs go up. Law enforcement costs go up. And the expenses are never covered by the trickle of tax revenue. Seriously, if you're against regressive taxes, then you kind of have to be against the realities of gambling. Warren Buffett isn't going to go broke on the craps tables, but Joe Sixpack very well might.

    But more than that, I hate the outright lies told by the gambling lobbyists when they're trying to get it legalized. I lived in Missouri when they were voting on whether to add riverboat gambling. The idea is that all the taxes from it would go to education. How can you vote against that and take money away from the kids? Well, they were kind of telling the truth. What really happened was that if the education budget was $X (I forget the actual numbers involved), and the tax revenue from gambling was $Y, then the new education budget was still exactly $X. The difference was that $Y of it came from gambling, and the rest came from the general fund as usual. Furthermore, the total amount of taxes collected did not go up, as a lot of the hypothetical extra revenue was lost to decreased sales taxes, lowered property values, etc., while service expenditures went up quite a bit. A couple of years into the grand experiment, it looked like Missouri was losing about 3*$Y from their bottom line. The casino's owners, on the other hand, were quite happy to export the revenues to their own state and let someone else clean up the mess.

    I'm pretty libertarian in my views. If you want to do something and it doesn't harm anyone but yourself, then have at. Contrary to the tone of the summary, I have no moral objections to gambling whatsoever. In practice, though, gambling seems to cause a lot of collateral damage around its participants. I guess I lump it in with smoking in restaurants; although I understand the arguments for allowing it, I have to admit that I've enjoyed not having it around anymore.

  • by twoallbeefpatties (615632) on Monday April 26, 2010 @02:45PM (#31987280)
    California is looking at a big budget deficit and is starting to wonder if taxed marijuana wouldn't be a fair tradeoff. You might not have to cross your fingers for too long if people start getting motivated enough.
  • by Maxo-Texas (864189) on Monday April 26, 2010 @03:00PM (#31987522)

    A) nothing I can address here.

    B) This is really common knowledge. Yahoo had a big piece on 10 areas who are hit really hard by the double whammy. Large liabilities committed to on the assumption that the good times would not end, high unemployment, no demand for new housing (so no new housing jobs). Many houses under water, being foreclosed).

    C) First-- are you really that out of the loop? This has been commonly known for over a decade. But okay.. I'll google it for you.
          http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20060621/ [epi.org]
          The wealthy pay a lower tax *rate* than everyone else at this point too. The secret is "fixed" state taxes like auto fees, property tax, etc. run 12% on poorest but only comprise .3% on the wealthiest (same dollar amount). Social security caps at just over $100k (15% on you and me-- under 1% on the wealthy). Likewise the "property tax" benefit only benefits you to the amount that it exceeds the standard deduction. A person with a $4k property tax bill saves almost nothing (a few hundred) while a person with a $20k bill saves almost $6,000.
    http://sociology.ucsc.edu/whorulesamerica/power/wealth.html [ucsc.edu]

    "As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)."

    I can't find it now, but a later source (2008, 2009) said the top 1% now owned 42.7% (and the next had 42.3%) putting the top 20% at an incredble 95% of the wealth.

    Our GINI index is close to most 3rd world countries now.

    D) Again, this is fairly common knowledge. Surprised you are ignorant of it.
    http://uchicagolaw.typepad.com/beckerposner/2010/04/american-wage-stagnationposner.html [typepad.com]
    "Between 1997 and 2008, median U.S. household income fell by 4 percent after adjustment for inflation. It presumably did not rise in 2009, and may not in 2010 either. A median is not an average; average income rose because the incomes of high earners rose, and so the effect was to increase the inequality of the income distribution..."

    E) If you can buy a device that can do any manual labor that a human can do for $100,000, then why hire a human. We are very close. You don't have to pay social security taxes for the work it does. It doesn't call in sick (it may break once in a while but will probably be modular and easy to fix). It's close. A decade. They can already pick random objects out of bins, toss things in the air and catch them, assemble things faster than humans.

    We are running out of jobs to step up to. Most of the jobs we can step up to based on intellect or training. Many of those jobs have a couple billion new humans who are smart enough to do those jobs and happy to do them for under $30,000 a year. It could be a paradise-- no need for most to work, essentially free food and lodging- or it could be pretty hellish.

  • Re:what a great idea (Score:4, Interesting)

    by mooingyak (720677) on Monday April 26, 2010 @03:08PM (#31987642)

    I do wish people would stop using the taxation argument about legalizing it. If the only reason to legalize an activity is to tax it then it really shouldn't be legal anyways. Take for example murder, lets legalize it and tax it right? No. There are good reasons it is illegal.

    The taxation argument typically applies for things where people are going to do it whether it's legal or not, and generally fall in the victimless crimes category (gambling, pot, prostitution, etc). When the law is not a deterrent it basically means that all the revenue is going to end up in the hands of organized crime. If you can't stop people from doing something, you might as well allow it instead and take a slice of the pie.

    The moral aspect of the issue is actually irrelevant. Certainly murder is something that organized crime is involved in, but it is my belief that the illegality of murder is in fact a deterrent for it. While most people wouldn't do it because they believe it's flat out wrong, there are people who would probably do it if they thought they could get away with it.

  • by Anonymous Coward on Monday April 26, 2010 @03:13PM (#31987724)

    You cannot legislate morality. What is immoral to one person may not be immoral to another.

    This story is also not about the government running Lotteries, but about them taxing them.

    What you are saying could be said about almost anything. Should the government ban chocolate (or, since it's being tried... transfats and excessive salt content) because some people are prone to obesity and there's a direct correlation? Taking it from a slightly different direction, should the government mandate fitness club memberships (and attendance) to fight obesity? Should the government not run parks and beaches because too much sun leads to skin cancer?

  • by Dog-Cow (21281) on Monday April 26, 2010 @03:26PM (#31987932)

    I'm not saying all Christians are this messed up, but this argument is just another in the long list of reasons Christianity makes no sense.

    Lying to preserve peace is neither evil nor wrong.

  • by terjeber (856226) on Monday April 26, 2010 @03:27PM (#31987950)

    Not all Republicans fit into that description.

    But the GOP as such does. So, if you support the GOP, you support the Jesus freaks and the legislation of morality. Originally antithetical to the entire GOP idea. The GOP as an organization has turned into a Jesus chanting bunch of socialists. That includes the previous administration. An administration that grew the FED beyond anything seen since the great depression. Yup, G. W. Bush was a Stalin-age socialist through and through.

    Vote GOP today and sadly that is exactly what you are voting for. The only cure is for those of us who know how dangerous that stuff is is to not vote GOP until they come to their senses and send all the Jesus freaks back to the Dems where they belong. Jesus being a socialist and all.

  • by 99BottlesOfBeerInMyF (813746) on Monday April 26, 2010 @03:31PM (#31988010)

    What you're advocating is called "trickle down economics". Even it's most famous adherents like Greenspan have declared it a failure. You seem to think that the US economy is a meritocracy and that it is intelligence or motivation that determines how wealthy you are. That belief does not stand up to statistical analysis and completely ignores a fundamental trait of economic called the wealth condensation principal (or it takes money to make money if you want it in more colloquial terms). The best predictor or wealth is the wealth of a person's parents. The largest transfer of wealth in the US is inheritance. If a person is in the top few percent for wealth ti is almost a statistical certainty their parents were in the same category. The only thing that changed under the trickle down economics era has been for the middle class to gradually become the lower class.

    So go ahead ... make it so people like Bill Gates and Steve Jobs or their original employees who became rich developing their products have no motivation to get rich. See what it does to the standard of living in the US.

    Bill Gates was the son of a lawyer and banker from a family of bankers. He's not a very good rags to riches story. He bought QDOS from the creators who worked hard to make it and used exploitive business practices to make himself rich while crippling progress in several fields of computing. But nevermind that. Basing the way your economy works upon statistical outliers is just idiotic. Let's make all the speed limits 200mph, because there are a few people with absurdly good reflexes that can drive that fast safely. Idiocy!

    The idea that people will stop working hard and growing the economy if the government takes a larger share in taxes is not founded in any fact. It was an idea that did not pan out. In fact, countries with better social safety nets recovered from the global economic meltdown a lot faster than the US and aren't dealing with the huge booms in crime and homelessness we are. People take more risks and try more innovative things when failure means going on the dole and eating cheap food while living in a tiny apartment, instead of living on the streets until you get sick and having no realistic chance of ever working your way back up. You say if we return taxes to levels they were in the 70's people will no longer work hard and innovate? You're basing this on how terrible the economy was in the 70's compared to now?

    Seriously, pick up a real economics textbook and learn how things work. Your ideas are unfounded and simply wrong.

  • by Anonymous Coward on Monday April 26, 2010 @03:32PM (#31988034)

    Which is a perfect reason for legalizing and taxing it to eliminate that externality. Certainly the tax rate can be set so the revenue collected offsets the costs to society from the screwups.

  • Re:Oh yeah? (Score:4, Interesting)

    by TrisexualPuppy (976893) on Monday April 26, 2010 @03:33PM (#31988046)
    So, about a "6% cut from all wagers..." Which wagers would these be? Win or lose? If every wager is taxed, I can see this being a BIG problem.

    I'm not the kind of girl to support a Neo-Con Republican Congress, but I'm in support of most of this previous anti-gambling legislation. We are once again looking at a tax on the stupid/poor. When the poorly paid people believe in their gambling as being some sort of "investment," they aren't able to spend money on life's necessities and BAM! are more likely to hit the ruts. Crime rates go up. Welfare costs go up to keep these guys afloat.
  • Re:what a great idea (Score:5, Interesting)

    by svtdragon (917476) on Monday April 26, 2010 @03:35PM (#31988076)
    Taxation in some of the cases you mention is win-win: alcohol, pot, etc. Vice taxes work because they add a financial disincentive to an objectively harmful activity (unless you're talking a glass of wine a day, a la Europe) to increase the short-term cost, effectively substituting for obviating the long-term cost.

    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.

    As to drugs, the idea of "legalize and tax" misses much of the point. That should be "legalize, regulate, and tax," where regulation is the process of telling you, the consumer, what you're getting, which in the case of drugs can minimize things like overdoses.

    However, all that's arguably separate from issues like gambling which, while an addictive behavior, is not objectively harmful beyond the addiction. Most other vice taxes are regressive, but they serve a long-term benefit in disincentivizing the often-physically-unhealthy vice, whereas taxing gambling provides the disincentive to an activity that causes little objective harm. This makes gambling unique (at least so far as I can see) among the vices that we'd regulate in this manner.
  • Re:Oh yeah? (Score:4, Interesting)

    by wjousts (1529427) on Monday April 26, 2010 @03:50PM (#31988264)

    So, about a "6% cut from all wagers..." Which wagers would these be? Win or lose?

    My grandmother used to like to bet on the horses, and, in the UK at least, with some bookies you paid tax on the wager itself (with no tax on the winnings), at others you paid tax on the winnings (or nothing if you lose).

    So paying taxes itself, was a bit of a gamble.

  • Re:what a great idea (Score:1, Interesting)

    by Anonymous Coward on Monday April 26, 2010 @03:50PM (#31988270)

    Personal responsibility be damned, right? Just like the Credit system.

    No one's holding a gun to your head to play poker, or use a CC.

    Stop trolling for your political party, and grow up!

  • by OrwellianLurker (1739950) on Monday April 26, 2010 @04:08PM (#31988478)

    Mr. Jefferson would never support this; he was a libertarian who opposed the Treasury Department.

    He was also a slaveholder who professed to abhor slavery.

    Don't get me wrong here, I admire Thomas Jefferson very much, but he was a flawed individual (as are we all) and not all his views make sense.

    He was in debt until he died and as a result he was never able to free all of his slaves. At one point in his life, he attempted to emancipate all the slaves.

Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth. -- Nero Wolfe

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