Poker Group Suggests Legalizing, Taxing Internet Games

In response to a bill that would ban Internet poker, the nonprofit Poker Players Alliance has released a study making a case for the online games to be legalized and taxed by the federal government.

Last week, the House passed the "Internet Gambling Prohibition and Enforcement Act," which would update the Interstate Wire Act of 1961. That act has been made somewhat nebulous thanks to modern technology, outlawing betting on sports across state lines over the telephone but leaving the enforcement of Internet gambling in a legal limbo. The House bill would specifically outlaw bets made using the Internet or any other form of electronic communication, appropriate $10 million to the Department of Justice's budgets in 2007 through 2010, and increase the maximum penalty to five years in prison.

The bill would also place some of the enforcement burden on Internet service providers and financial institutions that process online transactions by requiring them to "identify and block or otherwise prevent or prohibit restricted transactions."

The poker industry study found that more than $3 billion in federal and state revenues could be raised if Internet poker was regulated and taxed in the United States. The alliance asked for Congress to create a bipartisan commission to examine all online gaming.

The alliance said that Internet gambling is regulated in more than 80 countries and jurisdictions, including the United Kingdom, which passed legislation in 2005 to regulate and tax Internet gambling.