We Need the Money!

The passage of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) sent the online gaming world into shock. Stocks of online gaming companies plummeted on European stock exchanges. Thousands suddenly found themselves out of work. A brief history shows that UIGEA was tacked onto a totally unrelated bill, presented in a late night session of congress with no room for debate, and was designed to pander to a very tiny minority of US citizens.

The bill also sent shock waves throughout the financial industry. Banks and other financial institutions suddenly found themselves burdened with law enforcement responsibilities that they were ill equipped to handle. UIGEA placed the burden of enforcement squarely on the backs of banks without any federal funding to compensate for these new unwanted mandates.

One of the effects of this legislation is a massive loss of potential revenue for the federal government. A recent study conducted by the top accounting firm of Pricewaterhouse Cooper found that the United States government is missing out on potential revenue to the tune of $7 to $42.8 billion dollars. Thanks to UIGEA most of this money is now going to offshore banks and governments.

The report was presented last week to members of congress by Representative Jim McDermott. (D-Wash) McDermott, like most people grounded in reality, realizes that Americans continue to gamble online despite the passage of UIGEA. Representative brings up two very important issues. The first is the loss of much needed revenue for a government that is in debt for trillions of dollars. The second issue is consumer protection. In his own words “Instead of this ineffective attempt to prevent adults from gambling over the Internet, we need a more sensible approach to protect consumers and ensure that revenues that now flow offshore stay here in the U.S. and are therefore subject to taxation”.” A new, safer, more sensible approach is needed to regulate Internet gambling and protect consumers.”

Representative McDermott realizes that gambling prohibition has been ineffective and that as thing are now online gamblers are without protection and are at the mercy of offshore banks some of which have less than stellar reputations. Representative Barney Frank (D-Mass) has introduced a bill that would essentially repeal UIGEA and would introduce licensing and regulation of internet gambling in the US. Prohibition of gambling has been as effective as alcohol prohibition which many older Americans remember with distaste. Like alcohol prohibition the ban on gambling has spawned an underground economy, untaxed, unregulated, and easily invaded by criminal elements.

The ban on internet gambling has also created ill will against the United States from the World Trade Organization and the European Union. The suit By Antigua against the US could wreak havoc with agreements regarding intellectual property rights. The US barely dodged the bullet in a settlement with the EU that could have cost the US taxpayer billions.

The US has a national debt of trillions and the revenue from online gambling would help in many ways. It could help put the country back on the road to solvency and finance shortfalls of under funded social programs like social security. As it stands now unknown amounts of money leave the US on a daily basis depriving the government of much needed revenue. Revenue collected from gambling could possibly forestall the need for future tax increases.

Whether its poker, internet bingo, or the many other forms of gambling available online, the legalization, regulation, and taxation of online gambling would benefit all concerned and the government could get on with more important issues facing the nation. It is fervently hoped that both Frank’s and McDermott’s bills will pass– and soon.