Rep. McDermott Introduces Poker Companion Bill

Rep. Jim McDermott (D-WA) introduced an updated version of his poker tax bill late last week, adding a new tax that would specifically benefit state and tribal governments if Congress passed legislation to explicitly legalize and regulate online poker.

“The major reason (for the updated bill) is to make it possible for states to have access to online gambling revenue,” McDermott told The Hill.

McDermott has introduced tax-related legislation on poker before, and this bill is designed to serve as a companion bill to Rep. Barney Frank’s bill that would regulate the industry.

Online gambling advocates hailed it as an important step in the battle to regulate online poker.

“This legislation is a win-win for federal and state leaders, providing an opportunity to regulate a currently offshore and underground industry, protect consumers, and put to good use tens of billions (of dollars) in otherwise lost revenue,” said Michael Waxman of the Safe and Secure Internet Gambling Initiative.

McDermott’s bill, called the Internet Gambling Regulation and Tax Enforcement Act (HR 4976), calls for a 6 percent tax on deposits that would directly benefit state and tribal governments. Just like his previous poker bill, there will also be a 2 percent federal tax — of which a quarter will be allotted to foster-care programs.

“I wanted to help out foster kids,” said McDermott. “I have always watched them get the short end of the stick.”

The bill is estimated to raise approximately $30 billion for states and tribes over the next 10 years. Along with other taxes and federal licensing fees, online poker regulation is expected to generate $42 billion in federal revenue over 10 years, according to the Congressional Joint Committee on Taxation.

“At a time when many policy makers are faced with significant budget shortfalls, it is only common sense to choose regulation that will generate new revenues and create new jobs currently offshore as an alternative to layoffs, program cuts, or imposing broad-sweeping taxes that may further depress struggling families and businesses,” said Waxman.

Frank (D-MA) showed his support for McDermott’s legislation by immediately signing on as a co-sponsor. Rep. Earl Blumenauer (D-OR) and John Larson (D-CT) have also signed on as co-sponsors.

“Given the many critical government programs currently going under-funded or not funded at all, Internet gambling regulation should be given fair and immediate consideration,” McDermott said when he introduced his first poker-related piece of legislation of the session in October. “Prohibition in various guises has failed before and is failing once again. There is a better way.”

McDermott said he would move forward on his bill after Frank’s bill was marked up. Poker Players Alliance executive director John Pappas told Card Player that he was optimistic that would happen this spring.

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