Some Logic Here: A Case for Taxing Online Gambling Sites, Rather than Prosecuting Them

I’d like to thank Chris Flood, an attorney, for his editorial that I saw online on the Houston Chronicle.

Whether you agree or disagree with the actions taken by the US Federal government April 15, Flood puts it all into perspective. So I will excerpt some of what he said.

And thank him for the thoughtful analysis.

BTW, a Texas friend told me about this, so thanks, Robbie and Juanita, of Houston.

Flood begins by saying our gambling laws “make about as much sense as the government banning gin, but not vodka, during Prohibition.”

Some laws allow gambling, some encourage it, and some ban it, he notes.

“You can run an online business for people to bet on horse races, but not on a poker hand. So instead of collecting taxes on the $30 billion that is bet in this country every year on online poker sites run by offshore companies, our government is investing tax dollars in an attempt to close down the games. It’s time to fix this absurd system.”

Hear hear, Mr. Flood.

The government is spending millions of dollars on the chance of raking in $3 billion. Who is gambling now? Why not instead collect a steady stream of tax dollars on online poker, like many other countries do every day?

Because our laws now make some online gambling legal and other online gambling illegal, we have a likely unconstitutional Unlawful Internet Gambling Enforcement Act, he said.

It’s worth noting, Flood explains, “that Congress hasn’t targeted the online poker players in this country, where lawmakers know full well its popularity.”

“Forbes has reported that in 2009, online poker took in revenue of about $1.4 billion in the U.S. with PokerStars and Full Tilt, whose founders are now indicted, bringing in about 70 percent of the total. Let’s stop taking a double hit here. Stop spending to prosecute under an inconsistent law and start taxing online poker sites under the proven model used by other countries.”

Flood is a Houston-based white-collar defense attorney and former prosecutor who represented the owner of BetonSports.com in what was the largest online gambling case in U.S. history until last month.

I thank Mr. Flood, again, for his thoughtful comments.

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