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congress.jpgPrice Waterhouse Coopers recently revealed their study of online gambling and the tax revenue that could be generated by the proper regulation and taxation of online gambling. The study was commissioned by the UC Group, which is an online payment service which is not currently conducting business with U.S. customers, likely under the fear of legal action taken against them if they provide payment to online gambling sites. PWS acquired gambling revenue estimates from Global Beting and Gambling Consultants, then analyzed two bills that are currently in committee in the House of Representaties. The two bills are H.R. 2046, the Internet Gambling Regulation and Enforcement Act of 2007 and H.R. 2607, the Internet Gambling Regulation and Tax Enforcement Act. H.R. 2046 was introduced in April 2007 by Representative Barney Frank (D-MA) and H.R. 2607 was introduced in June of 2007 by Representative Jim McDermott (D-WA). H.R. 2046 is currently in the House Subcommittee on Commerce, Trade, and Consumer Protection and H.R. 2607 is currently in the House Committee on Ways and Means. H.R. 2046 currently has forty-five co-sponsors while H.R. 2607 has one.

The findings have revealed that if the two online gambling bills currently in the U.S. Legislature were to pass, that up to $17.6 billion in taxes could be generated over the next ten years and collected by the U.S. government. The study has two figures, $8.7 billion and $17.6 billion. States are still allowed to choose whether to allow online gambling under the two House bills, and the $17.6 billion figure was generated under the assumption that all the states that allow land-based gambling would allow online gambling, while the $8.7 billion estimate was generated under the assumption that the ten states that currently prohibit online gambling would continue to do so. The ten states that have laws restricting online gambling in some way are Illinois, Indiana, Louisiana, Michigan, Nevada, New Jersey, New York, Oregon, South Dakota, and Washington. These states ban online gambling for various reasons, ranging from wanting to protect their residents from the evils of gambling to wanting to protect the profits of their own land-based casinos.

No new taxes would be passed to generate the tax revenue; rather, the tax revenues would be generated by taxes that are already in place. According to the study, 56% of the tax revenue would be paid from individual income taxes, 22% of the revenues would be paid from wagering taxes, 18% from licensing taxes, and 4% of the revenues would be generated by corporate income tax. If all states were to allow online gambling, the estimated tax revenue would then rise to $33.9 billion. Additional taxes could be generated in the unlikely event that sports bets were to be allowed. If that became the case, then the estimated tax revenue would grow by a further $10.2 billion if one assumes the ten states banning online gambling continued to do so, $21.4 billion if all states that allowed land-based gambling were to allow online gambling, and and $42.8 billion if all states were to allow online gambling with no restrictions.

The U.S. government has been facing pressure to change their laws banning online gambling, both from the U.S. citizens who are outraged that the government is telling them what they can and cannot do with their money, and also from foreign countries who are displeased with the U.S. placing restrictions on the online gambling market that hurt companies based in their countries. The U.S. is currently prohibiting its citizens from gambling online by preventing them from transferring their money to gambling sites, as under the Unlawful Internet Gambling and Enforcement Act, it is illegal fro banks and other financial institutions to transfer money to gambling sites.

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