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Miami Herald: Online Gambling a Win-Win?

Written by:
C Costigan
Published on:
Apr/25/2010
online gambling

The Miami Herald on Sunday reported on the multi-billion dollar online gambling sector, asking if it is a "win-win". 

Democrats seem to think so, Republicans not so much.

Regarding the Democrats:

Reps. Barney Frank, D-Mass., and Jim McDermott, D-Wash., are leading a group that proposes to repeal the Unlawful Internet Gambling Enforcement Act, which is set to go into effect June 1. Their plan would legalize and tax online gambling.

``We have an activity going on illegally in this country and we're pretending it doesn't exist,'' McDermott said. Internet gambling ``people have said, `We want to be legal and we're certainly willing to pay taxes,' and we need the money. On every count, this is a net positive.''

The bill calls for a 6 percent tax on all deposits to be paid to state and tribal governments made by residents of their jurisdiction. For example, if someone living in Missouri puts $1,000 into an online gambling account anywhere in the country, $60 would go to Missouri's state government.

Additionally, 2 percent of all deposits would go to the federal government. The congressional Joint Committee on Taxation estimated the bill would generate $30 billion for state and tribal governments and $42 billion for the federal government over the next 10 years.

McDermott went on to describe just how important such legislature would be for individual states:

``This is a huge boon to the state governments,'' McDermott said. ``If you look across the country you're seeing programs cut. In Arizona, they just cut out a program for children's health for 40,000 kids. Here's a source of money'' to keep that going.

Ironically, McDermott's home base of Washington is the only state in the union that makes gambling online a Class C felony for its citizens.  That law was enacted by the state's Democratic Governor.

Republicans are mostly unanimous that they do not want to see online gambling legalized.

Long before Barney Frank came onto the scene in support of legalized Internet gambling, there was Arizona Republican Senator Jon Kyl.  His impact on iGaming began in 1998, nearly 10 years before Congressman Frank entered into the picture.  Over the past decade, Kyl has been steadfast in regard to abolishing online gambling.

So too have the professional sports leagues and influential groups such as Focus on Family.

Chad Hills, policy and research analyst for Focus on the Family, said addictive gambling is already a problem in America, and passage of this legislation would only exacerbate that problem.

``This basically creates a national casino and there's no time they won't be operating,'' Hills said. ``We already have between 15 and 20 million people in the U.S. with a pathological gambling problem.''

The Herald piece also goes on to point out that land-based casinos for the most part are now supportive of the sector, something they were not in the beginning.

That's because most casinos see Internet gambling as another source of revenue rather than a competitor.

``The Internet, no matter how hard it tries, will never be able to substitute that personal interaction that guests desire and our team members provide,'' said Troy Stremming, the senior vice president of government relations and public affairs for Ameristar Casinos Inc.

Fahrenkopf, who was the chairman of the Republican National Committee from 1983 to 1989, agreed.

``If there was going to be cannibalization, it's already taking place,'' he said. ``Ten years ago, if we took a look at the financial statement of MGM Mirage, for example, 65 to 70 percent of its bottom line would've come from gaming revenue. Three years ago, it was 45 percent.''

Christopher Costigan, Gambling911.com Publisher

 

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