Internet poker could net US billions in tax: study

NEW YORK (Reuters) – Regulating Internet poker could bring
the U.S. government some $3.3 billion in taxes annually,
according to a study to be released on Tuesday, ahead of an
expected debate over legislation to ban online gambling.

Income taxes on winnings from Internet poker alone — which
is estimated to have attracted $60 billion in wagers worldwide
in 2005 — could amount to $2.5 billion each year, according to
the study commissioned by the Poker Players Alliance, a group
calling for the regulation of online gambling.

“The majority of the revenue that’s generated would be from
reporting of poker winnings,” said Michael Bolcerek, president
of the group.

The study also said that a 1 percent user fee on online
poker transactions would generate another $800 million to $1
billion in revenue per year for the U.S. government.

The U.S. Justice Department says a 1961 law that forbids
interstate telephone betting also applies to the Internet,
making it illegal for the industry to do business in the
country.

Authors of a bill expected to be debated in the U.S. House
of Representatives on Wednesday, say their legislation would
clarify that point for prosecutors. It would also prohibit
gambling businesses from settling Internet wagers with credit
cards, checks or fund transfers.

Among Web sites used by U.S. players to gamble are those
run by UK-listed companies such as Party Gaming Plc and 888
Holdings.

The Poker Players Alliance says the fees and taxes that
would come with regulation could deter some people from playing
online, but Bolcerek said legalizing online poker would still
lead to an increase in the number of players and revenue.

The Internet poker market is projected to grow 15 percent
to 20 percent a year, according to the study.

“The reason why poker hasn’t exploded as rapidly as it
probably could have is because there is this overhanging legal
question,” Bolcerek said. “Once you remove that barrier …
that’s going to more than compensate for any potential negative
effect of people not playing the game because they are being
taxed.”