Rep. McDermott’s New Internet Gambling Legislation

Rep. McDermott’s New Internet Gambling Legislation Would Increase Projected Revenue to Up To $72 Billion Over Ten Years – commentary

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The article reports on Representative Jim McDermott’s updated Internet Gambling Regulation and Tax Enforcement Act of 2010, introduced on March 25, 2010, which aimed to modernize taxation and regulation of online gambling while generating significant federal and state revenue.

The bill proposed a structure ensuring that Internet gambling operators would pay proper taxes and license fees on wagers placed by U.S. residents. A major update from previous drafts was a new provision allocating six percent of all gambling deposits from each state and tribal jurisdiction directly back to those local governments, generating an estimated $30 billion for states and tribes over ten years. Combined with federal revenues, the total projected earnings rose to $72 billion over a decade. Additionally, 25 percent of federal revenue would fund foster care and social assistance programs.​

The legislation complemented Chairman Barney Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2267), establishing consumer protections, anti-fraud rules, and state-level oversight. Together, these proposals sought to replace prohibition with a legal, regulated framework that would protect consumers, strengthen financial transparency, and redirect offshore gambling revenue back into the U.S. economy.​

Supporters, including the Safe and Secure Internet Gambling Initiative, praised the move as a “win-win”—arguing regulation would create jobs, protect players, and provide critical tax revenue at a time of widespread budget shortfalls. Key co-sponsors included Barney Frank (D-MA), John Larson (D-CT), and Earl Blumenauer (D-OR), while several states were already exploring legalization on their own in anticipation of federal action.​

In summary, McDermott’s bill sought to transform an unregulated offshore activity into a legitimate U.S. industry—funding public programs, boosting state economies, and ensuring safe, lawful internet gambling through federal oversight.