The online gambling debate is heating up on Capitol Hill.  Democratic legislators are mounting a formidable challenge to the Unlawful Internet Gambling Enforcement Act that is scheduled to be enforced starting on June 30^th.  One of the proponents of a bill to overturn the UIGEA law, Democratic Representative Jim McDermott from the State of Washington, is spearheading the new endeavour to overturn UIGEA.  

Last week, McDermott appeared before a committee in the House of Representatives in an attempt to propel legislation to legalize online gambling.  McDermott is urging for the passage of online gambling in the United States.  In turn, there would be taxation on the winnings from the gambling that would be put toward paying for improvements in foster care and early childhood education.

The sponsor of the bill, Democratic Representative Barney Frank from Massachusetts, testified at the Committee hearing that citizens of the United States should have a right to blow their earnings on poker.  He stated that it’s a prerogative of all Americans to spend their money as they see fit, as long as it does not violate any Federal or State laws in the United States.

There is a tremendous amount of money at stake in these hearings.  There is a potential for hundreds of millions of dollars in tax revenues that could be used by the Federal government as well as the individual states to offset the massive deficits they are now experiencing.  Online gamblers feel the same as these Democratic politicians – the gamblers want online gambling at any cost, and they are more than willing to have their profits on online gambling taxed, even at a high rate, if it means that their online gambling would be legal in the United States.

McDermott has fostered a bill called the Internet Gambling Regulation and Tax Enforcement Act.  He is Chairman of the Ways and Means Income Security and Family Support Subcommittee, and his bill would piggy-back onto Frank’s Bill to legalize online gambling in the U.S.

McDermott’s bill proposes a 2% tax on Internet gambling deposits and believes that the online gambling tax would generate $42 billion in new revenues over the next decade.  An additional $8.5 billion would be raised by applying an existing 0.25% excise tax on online wagers.

On the Canadian front, the British Lottery Corporation is linking up with other Canadian lotteries to permit online gambling access throughout the country.  It is expected that provinces not presently operating online casino games would get actively involved in the project.