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Online Gambling Tax Could Help State Debts

Since online gambling was banned in the U.S. in 2011 there has been an on-going battle to have it legalised again. Now with state debts growing it looks as if legalisation is closer than ever before.

If online gambling was legalised and regulated, the resultant tax revenues could be a major help to states struggling with debt.

Obviously gambling taxes are not the ideal solution for debt problems; legalisation would provide a new source of revenue at the same time as creating a number of jobs.  Last year the U.S. commercial casino sector made $34.64 billion in revenues, in the 22 states where casinos are operating, casinos contributed a total of $7.93 billion in tax revenue. These figures will easily grow significantly should online gambling be legalised.

Randy Fine, the managing director of The Fine Point Group, said that he’d “heard estimates of online poker being a $6 billion a year business.” Fine hypothesised that states could take a third of that figure giving them an extra $2 billion.

Many experts have pointed out that a gambling tax is one form of taxation that players don’t mind paying. Another advantage is that legalising online gambling will allow players to play in a regulated environment with full consumer protection. Another source of income for states would be taxation on a player’s winnings. At present winnings at land casinos are generally ignored, but thanks to the digital structure of online gambling it is much easier for the Internal Revenue Service to track winnings.

However, Dr. I. Rose, a Professor at the Whittier Law School and gambling expert, said that even the highest estimates of what the government could raise through a gambling tax is “literally insignificant” compared to the $15.7 trillion national debt.

Many are suggestion that the U.S. regulators imitate Spain where after online poker was legalised a retrospective tax was applied to online poker operators who had previously allowed bets from Spanish players.  This has proved successful with the majority of operators paying up. Whatever happens, there is certainly potential here and developments can be expected in the near future.

OCA News Editor