New Legislation to Reform Tax Code Includes Provisions to Legalize, Regulate and Tax Internet Gambling – commentary

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The article discusses Representative Jim McDermott’s Internet Gambling Regulation and Tax Enforcement Act of 2010, introduced to help legalize and tax online gambling in the United States. The legislation’s purpose was to generate significant revenue for both federal and state governments while creating a safer, regulated online gambling environment.​

The bill proposed that states and tribal governments receive 6% of all gambling deposits made by residents within their jurisdictions, while the federal government would collect 2%. This tax structure was expected to produce $30 billion for state and tribal governments and $42 billion federally over ten years. A portion of the federal tax would be designated to support social programs like foster care and children’s health initiatives.​

The legislation aimed to complement Chairman Barney Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2267)—establishing a federal regulatory framework for online gambling operators. It emphasized consumer safeguards, including protections against underage and problem gambling, fraud, and identity theft.

Supporters, including the Safe and Secure Internet Gambling Initiative, argued that legal regulation would shift billions away from offshore operators, protect U.S. consumers, and stabilize public budgets amid economic challenges. McDermott and his co-sponsors, Barney Frank (D-MA), John Larson (D-CT), and Earl Blumenauer (D-OR), positioned the bill as a practical, revenue-generating solution rather than continued prohibition.​

In summary, the article highlights how McDermott’s legislation sought to transform online gambling from an unregulated, offshore industry into a safe, taxable, and beneficial source of funding for U.S. governments and communities.