New Internet Gambling Legislation Would Protect Consumers and Generate Billions in New Revenue

Representative Barney Frank (D-MA) pictured right,, Chairman of the House Committee on Financial Services, and Representative Jim McDermott (D-WA), pictured left, introduced two bills on May 6 to regulate Internet gambling and ensure that taxes are collected from online wagers. Frank also introduced the Reasonable Prudence in Regulation Act of 2009, a bill to delay compliance for one year with the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA)—the law that sought to limit Americans’ ability to gamble online.

Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act of 2009, would establish a licensing and enforcement framework that permits licensed operators to accept wagers from individuals in the U.S. The legislation also mandates a number of significant consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud, and identify theft.

McDermott’s bill seeks to ensure that individual and corporate taxes owed on regulated Internet gambling activities are collected. According to a recent analysis, collecting taxes on regulated Internet gambling would allow the US to capture an amount estimated to range from $48.6 billion to $62.7 billion over the next decade. Without this legislation, this revenue will remain uncollected while millions of Americans gamble online without consumer protections.

“The government should not interfere with people's liberty unless there is a good reason,” Frank said. “This is, I believe, the single biggest example of an intrusion into the principle that people should be free to do things on the Internet. It's clearly the case that gambling is an activity that can be done offline but not online.”

The legislation also grants the Treasury Department authority to license and revoke licenses of Internet gambling web sites, assess license holders for the costs of background checks and investigations of web sites applying for the license, and repeals language passed in 2006 and signed into law by President Bush that made it illegal for banks and credit card companies to process bets made on the Internet.