Why Obama Should Address Online Gambling And Uigea

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

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

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

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

Although there are so many other important agendas our new president willface such as the current situation in the middle east, international relationswill be vital for Obama. He must show the world leaders that he is notconducting “business as usual” and will fight to correct the internationalfinancial blunders of the Bush administration. For instance; The United States(USA) and the European Union (EU) are currently battling over the UnlawfulInternet Gambling Enforcement Act (UIGEA) and possible violations of the WorldTrade Organization (WTO) The EU is accusing the US of violating termsestablished by the WTO regarding online gambling companies operating withinEurope. This is a perfect opportunity for Obama and his administration to bringa “new deal to the table” (no pun intended). This could potentially accomplishtwo goals; create a new source of revenue for our failing economy and repair asevered relation with the World Trade Organization.

With the current administration ready to implement the final regulations forthe UIGEA just two months before being leaving the White House, this is anissue the new administration should address as soon as possible. The potentiallong term damage this could cause on the U.S. online gambling market would bedevastating. However, with the Unlawful Internet Gambling Enforcement Actabolished and a new sensible regulation written and implemented (I nominateBarney Frank for this job) we could create our own domestic gaming institutionsand offer them on an international market. We already have tax paying gamblingoperations 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 theirbusiness to an international community. This alone would create huge amounts ofadditional taxes these businesses already pay.

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

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