New Legislation Proposes Federal Online Gambling Tax
In response to the launch of internet gambling in various US states a new federal online gambling tax regime has been proposed. The regime was put forward by Rep. Jim McDermott in the Internet Gambling Regulation and Tax Enforcement Act of 2013. It would implement a 12% deposit tax which would be paid by the operators rather than players.4% of the tax would be collected by the federal government while the rest would be distributed between qualified states and tribes in the federal regime. The tax would be dependent on the location of the customer in the respective state or tribal area at the time of making a deposit.
The scheme is similar to the Point of Consumption tax that is soon to be implemented in the UK. Supporters of the tax said that the methodology is far better suited to an online market than a Gross Gaming Revenue methodology as the basis for tax calculation.
The advantages of a deposit tax is that it is paid up front, allows for transparency in the market and supports both revenue calculation and distribution across numerous jurisdictions dependent upon the place of consumption.
It is thought that by 2020 online gambling will generate revenue of at least $9.3 billion.