Just as our Jason Kirk was lamenting the lack of federal legislative action on online poker, Rep. Jim McDermott (D-WA) was introducing legislation into the House of Representatives sketching out a proposed framework for taxing online gambling. McDermott’s HR3491 ‘Internet Gambling Regulation and Tax Enforcement Act of 2013’ is the pol’s third attempt at crafting online gambling tax-related legislation, and is intended to complement the online gambling bill introduced this summer by Rep. Peter King (R-NY), much as McDermott’s previous efforts were intended to complement regulatory bills offered up by then-Rep. Barney Frank (D-MA).
McDermott’s scheme envisions a 12% tax on online gambling deposits that would be paid by the operator, not the player. The feds would keep one-third of this revenue, with the remainder going to the state or Indian tribe in whose jurisdiction the depositing player resides – an echo of the UK government’s proposed point-of-consumption tax. With no one as yet having a clear concept of how interstate gambling compacts would resolve taxation issues, McDermott’s plan pitches itself as a more practical and streamlined alternative than a gross gaming revenue tax.
Unfortunately for McDermott, this latest bill might as well have been named the Day Late & Dollar Short Act of 2013, and not just because there still appears to be no great urgency at the federal level to sort out the online gambling question. By the time the calendar switches over to December, there will be three states offering some form of non-horseracing intrastate online gambling, and with the exception of Nevada, none have expressed a great desire to have the feds stick their nose in. That may change as more states come online and compact negotiations drag on, but at present, McDermott’s well-meaning but ill-timed bill appears headed for the same ash heap of history on which his previous two bills ended up.