Get exclusive CAP network offers from top brands

View CAP Offers

More UIGEA, more taxes: A look at the new online poker bill

“We’re going to try to get a bill on the president’s desk in this Congress,” Rep. Joe Barton says about his new online poker bill, the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011.

But if he succeeds, would it be good for the online poker industry?

No casinos … yet
Though it’s got the PPA’s approval, the bill’s biggest flaw may be that it doesn’t include the larger issue of online casino gambling. So, as the owner of the WSOP brand, Caesars Entertainment would still benefit from the bill, but not as much as if it also offered widespread casino gambling regulations.

States have the power
Barton’s bill is national, but it puts online gambling licensing in the hands of the states. States could choose to opt out of the system and block its citizens’ access.

Licenses would be issued for five-year periods, and “certain states with the most history regulating the most gaming – regulated more than 5% of total U.S. gaming for three of the previous five years (i.e. Nevada and New Jersey) – would be immediately recognized as eligible to issue licenses; other states would have to apply,” PocketFives.com points out.

… and so does the UIGEA
Maybe the most surprising element of the bill is that, unlike other online gambling proposals, it doesn’t seek to eliminate the UIGEA but to strengthen it — it says so right in its title!

How’s that work? In addition to creating a new online poker licensing system, the new law would mean even more of a crackdown on unlicensed companies. The goal of this, according to Barton, is to better protect American consumers.

Taxes
If that UIGEA stuff sounds sorta lame, consider that the bill will also “tax Americans heavily and will put them under the government spotlight,” according to the Offshore Gaming Association.

Just a week earlier, a different online gambling bill was introduced by U.S. Representatives Barney Frank, Jim McDermott and John Campbell that will probably be tied to Barton’s bill.

That other bill, the Internet Gambling Regulation and Tax Enforcement Act, H.R. 2230, “would not legalize online gambling, and is meant to offer a tax structure for online gambling assuming that it becomes legal,” reports The Hill.

“Assuming online gambling is legalized, the bill would require companies to subject net online winnings to a withholding tax, now 28 percent, in line with current withholding taxes for other gambling winnings.”

If this bill is implemented, online gambling companies would, after being licensed, “be taxed on 2 percent of the deposits they receive every month. States would also be able to tax the online gambling sites at a rate of 6 percent a month,” reports Michael Cohn at Accounting Today.

“A quarter of the taxes collected by the federal government would be directed toward programs for disadvantaged and foster children.”