Last week during the presentation of his bill to legalize internet gambling in USA to a Ways and Means Committee hearing in the House of Representatives, Barney Frank said: "We are talking about a decision by adults to do what they want to do with their own money." As lawmakers hunt for money to balance the $1.4 trillion budget deficit, taxing online gambling could raise about US $42 billion over a decade, according to the joint congressional tax committee.

The House is considering two Internet gambling bills. While Frank’s bill aims to legalize online gambling, the other proposal, which requires people to declare winnings from online gambling to U.S. tax authorities, sets a 0.25% tax on wagers of all federally licensed bets.

Frank introduced his proposal several years ago, but with the introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006 by the Bush administration, to make it illegal for financial institutions to knowingly accept payment in online gaming transactions, Internet betting in the country, except fantasy football and horse racing, was totally wiped out.

The UIGEA amendment was attached to the Safe Ports Act as one of the acts of the first Dubya Bush administration, championed by Senate Majority Leader Bill Frist. According to professor I Nelson Rose, Frist told Democrats that if they didn’t like it, “they could vote against it, and be seen as being soft on Islamist terrorism.”

While the multibillion-dollar Internet gambling industry is not illegal, it soon will be illegal for financial institutions to knowingly accept payment in online gaming transactions, under a law that is set to take effect on June 01, when banks will play safe and start blocking transfers good, bad or indifferent.

Although Democrat Jim McDermott sponsors the tax bill, not all Democrats back it, and while some Republicans favour it, others cited moral concerns. Representative Bob Goodlatte, a Virginia Republican, said that states should be able to make the decision on their own, and can opt out of the law if it passes. Only Utah and Hawaii ban gambling in USA. (E-05.26.10)

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