Internet Gambling Regulation, Consumer Protection and Enforcement Act

Several bills have been introduced in this Congress to license and regulate Internet wagering.  This bill sets up a procedure to tax such wagering if any of the other bills are enacted into law.  It is a redrafted version of legislation introduced in previous Congresses and is the tax component of the Internet licensing bill already introduced by Congressmen John Campbell (R-CA) and Barney Frank (D-MA) (H.R. 1174).

House Bill

Congressman Jim McDermott (D-WA) introduced the Internet Gambling Regulation and Tax Enforcement Act of 2011 (H.R.  2230) on June 16, 2011.   

The bill would impose a 2% tax on any company licensed by the Department of Treasury to offer Internet wagering.  The 2% tax would be paid every 30 days based on the funds deposited with the operator by bettors during that period.  The fee could not be paid out of funds deposited by bettors.  This tax would be 50% on unlicensed operators.  The bill would also entitle states and tribes to impose up to an additional 6% tax on funds deposited by customers from the state or tribal nation. 

Internet gambling operators must also report to the Treasury the names of bettors, addresses, tax IDs, gross winnings, gross wagers and gross losses, net winnings, amounts deposited and withdrawn, and opening and closing balances each year to the authorities.  Operators must withhold taxes owed on net winnings and implement measures to ensure that all taxes applicable to Internet gambling are collected from the operators and individual bettors and paid to the Treasury.  The bill also applies a .25% excise tax on wagering over the Internet.

Funds raised would be put into a special fund to be used to promote the arts and to improve the education, job-training and care of foster children.

Congressional Action

The bill has been referred to the Committee on Ways and Means and to the Committee on Education and the Workforce.

AHC Position

The AHC has not taken a formal position on this legislation yet but the additional tax provisions are a concern.