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Article by Magyck Sysop

The incoming Obama administration should take a good hard look at online gambling and UIGEA.

During Obama’s campaign for the presidency, his major focus was on three major domestic issues: health care, education and tax cuts for the middle class. When asked how these issues would be financed, Obama stated that he would scrutinize the national budget and seize funding for any programs or initiatives that were deemed inefficient or unworkable and suggested he would find new source of revenues that were more realistic. Although the U.S. national budget is a massive and complex structure that has been seriously used and abused for the past eight years, and there are no simple overnight or easy fix solutions to repair the current damage done, here is one of many areas of internal revenue generation President-Elect Obama can look into… The regulation of Online Gambling.

It is not commonly known, but the fact is that online gambling has actually generated over four billion dollars internationally in the past two years alone. Bare in mind that this came with limited U.S. participation since the implementation of UIGEA (otherwise known as The Unlawful Internet Gambling Enforcement Act). And it is forecasted that the online gaming industry will top fifteen billion dollars by 2012 with or without the participation of the United States. A Price Waterhouse Coopers (PWC) study revealed that the United States has the potential to collect at least .7 billion and up to .6 billion in the next 10 years if it would tax and regulate online gambling, including poker. And those figures don’t include potential sports wagers. The .7 billion figure did not take into account the 10 states that currently have laws on their books that specifically prohibit online gambling, even though they allow some forms of gambling (Illinois, Indiana, Louisiana, Michigan, Nevada, New Jersey, New York, Oregon, South Dakota, and Washington). If all the states would tax and regulate online gambling, .9 billion in taxes would be generated in the next 10 years, according to the PWC study.

As a matter of domestic issue, there are still many other aspects of online gambling regulation that would need to be addressed such as monitoring for underage activity, policing black market or “rogue” casinos and support for addiction to name a few. But just as we have done in the past with the prohibition of alcohol (which ironically shares many similarities to the prohibition of online gambling including a national financial crisis at the time) We the people of America wanted the choice of whether or not to drink, the free market suggested a potentially lucrative business for both domestic and imported product and our government saw a huge alcohol tax revenue that unarguably gave new life to an obviously failing economy.

Although there are so many other important agendas our new president will face such as the current situation in the middle east, international relations will be vital for Obama. He must show the world leaders that he is not conducting “business as usual” and will fight to correct the international financial blunders of the Bush administration. For instance; The United States (USA) and the European Union (EU) are currently battling over the Unlawful Internet Gambling Enforcement Act (UIGEA) and possible violations of the World Trade Organization (WTO) The EU is accusing the US of violating terms established by the WTO regarding online gambling companies operating within Europe. This is a perfect opportunity for Obama and his administration to bring a “new deal to the table” (no pun intended). This could potentially accomplish two goals; create a new source of revenue for our failing economy and repair a severed relation with the World Trade Organization.

With the current administration ready to implement the final regulations for the UIGEA just two months before being leaving the White House, this is an issue the new administration should address as soon as possible. The potential long term damage this could cause on the U.S. online gambling market would be devastating. However, with the Unlawful Internet Gambling Enforcement Act abolished and a new sensible regulation written and implemented (I nominate Barney Frank for this job) we could create our own domestic gaming institutions and offer them on an international market. We already have tax paying gambling operations here in the United States such as Caesars Palace, MGM Mirage, Harrah’s and more. Perhaps they would like to expand the gaming aspect of their business to an international community. This alone would create huge amounts of additional taxes these businesses already pay.

The bottom line is this; UIGEA was a bad idea from the beginning and it needs to be revoked. The Obama administration needs to carefully look at online gambling and its potential as a major generator for future tax revenue. It has been done before with alcohol prohibition and it can be done with gaming prohibition.