License Fee

• This legislation requires each online gambling institution to pay a monthly licensing fee. The amount of this fee is two percent of the deposits made by bettors during the previous month. It may not be deducted from deposits gamblers made with that institution. In the event an unauthorized person -- such as a minor or someone other than the account holder -- places a bet, a fee of 50 percent of the funds deposited in the unauthorized account will be assessed.
  
  

Filing Returns

• Any institution licensed to conduct Internet gambling is required to file returns with the government that include the following information: the name, address and Tax Identification Number (TIN) of the licensee and of each person who placed a bet with them during the previous year; gross wins, losses and wagers, along with each gambler's net winnings from the previous year; taxes withheld during that year, as well as each gambler's total deposit and withdrawal amounts. The licensee will also provide a tax form to gamblers with all applicable information by January 31 of the following year to aid in filing their tax returns.
  
  

Projected Revenue

• On October 29, 2009 the results of a study conducted by the federal government's Joint Committee on Taxation (JCT) were made public. According to this report, legalizing and regulating Internet gambling could provide $10 to $42 billion in revenue over a ten-year period. This range is based on the JCT report's proposed taxation levels of four percent and six percent -- as well as the anticipated participation of states and Indigenous American tribes.
  
  

Revisions to the Bill

• Representative McDermott introduced some new components to this bill on March 30, 2010. One provision incentivizes states and tribal communities to participate by creating a six percent tax on deposits that would be reserved for those entities. Tax breaks would be created to entice currently illegal online casinos to operate legally. These measures would also mandate that Internet gambling not be eligible for tax exemptions that currently apply to horse and dog racing, as well as Jai-Alai. In addition, 25 percent of the tax proceeds would be dedicated to programs for foster children and 0.5 percent would go to historic preservation and the arts.