Report: U.S. Government Could Make $50 Billion from Online Gaming

Only one year ago, a PricewaterhouseCoopers LLP analysis estimated that regulated internet gambling activities had the potential to generate up to $42.8 billion in revenue for the U.S. government over the span of ten years from the passage of such pro-gaming legislation. Recently, the same company issued an updated reported that put the ten-year revenue estimation at $51.9 billion due to a significant increase in the number of online gamblers in the United States, despite the attempted prohibition by way of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA).

The new PricewaterhouseCoopers numbers took into consideration revenue sources such as licensing fees, wagering taxes, and individual and corporate income taxes on internet gambling activities. Experts then broke down expected revenue by year, under the assumption that regulation is put into motion in 2009. For the year 2010, revenue generated only came to just over $1 billion, as time would be required for companies to become compliant and taxpayers would need time to become familiar with filing obligations. Each year, revenue possibilities increase steadily, putting the ten-year total at $51.9 billion.

It is noted that the estimates are created under the assumption that no professional sports leagues, such as the NFL and NBA, or individual states would opt out of the legislation. If sports leagues remove themselves from internet regulation, the overall number would decrease by more than $10 billion, and any states who refuse to participate would also cause a drop in the revenue estimates.

The study was done under the plausible assumption that internet gaming regulation legislation would be passed in the houses of Congress by October of 2009, with specific references to bills proposed by Reps. Barney Frank (D-MA) and Jim McDermott (D-WA). Frank’s H.R. 2046, the Internet Gambling Regulation and Enforcement Act (IGREA), is strongly believed to be the legislation that Frank vowed to reintroduce (/news/barney-frank-to-introduce-anti-uigea-legislation-in-march-2448/) in the coming weeks. McDermott’s H.R. 5523 was a companion bill to IGREA that called for the taxation of regulated gaming activities.

With the release of the new numbers, the Safe and Secure Internet Gambling Initiative (SSIGI) released a statement in support of legislation based on the revenue possibilities contained in the PricewaterhouseCoopers study.

Spokesman for the organization, Jeffrey Sandman, commented, “This analysis further illustrates that the U.S. is missing the opportunity to collect billions of dollars in federal revenues. We are optimistic that the Obama Administration and Congress will pay closer attention to this issue as they seek to find new revenues that can be generated without raising taxes for critical federal, state and local government programs. Regulation is also needed to ensure there are safeguards to protect against compulsive and underage gambling, money laundering, fraud and identity theft.”

The SSIGI website provides access to United States government officials, who need to be made aware of the opinions of the poker community on upcoming proposed legislation. Log on to SSIGI to make your voices heard to your elected representatives.

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