Gambling has been a profitable business for centuries and even with all of the changes in the consumer landscape, it continues to be a big draw. These days, the popular way to enjoy gambling games is through online casinos.
Online casinos are popular mainly because of the convenience that they offer players. Rather than needing to physically appear at a land-based establishment, they allow players to place wagers from the comfort of their own homes or even on the go. As Liliana Costache points out, many consumers would not rather use Card Player to find online casinos to meet their needs.
But as these platforms continue to rake in billions of dollars, US lawmakers are faced with the issue of their taxation. Specifically, lawmakers in states where gambling is already legal are looking to create a new framework for taxation.
New Jersey already set the standard with its 2013 framework and the National Council of Legislators from Gaming States want to build on this. When complete, it will not only benefit the states that already allow online gambling but will act as a guide for states that are just allowing it.
“Ninety-five percent of this mirrors what we’re already doing in New Jersey, which is good. It’s a great start that builds on what is already in place and operational elsewhere,” says Former New Jersey Division of Gaming Enforcement head David Rebuck.
Among the proposals are a ban on credit card deposits and a tax rate of 15% to 25%. This is especially important because the rise in online gambling has meant more calls for it to be legalized in more states. Currently, only Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia allow online gaming while others like Maryland are contemplating doing the same.
But even with this, certain challenges abound. The tax rate for online gambling is an especially touchy subject. New York, which is looking to legalize online gambling, is looking at a 31.5% tax rate, which is much higher than what the new framework would suggest. Interestingly enough, West Virginia delegate Shaun Fluharty has said that the reason for the proposed tax rate was to allow smaller businesses to enter the market as well.
Along with the tax rate, a number of measures have been put in place for consumer protection, which is a hot-button issue in the gambling space. These include deposit limits of $20,000 within 24 hours, as well as the creation of regulatory bodies in each state.
However, not working out these issues only hurts the states in question as consumers are increasingly turning to offshore and other external gambling platforms to have their needs met. States like New Jersey have seen hundreds of millions of dollars in online gambling tax revenue and states with no such legalization are losing out on this. But if this framework can be properly developed, rates of online gambling in US states can increase, thus generating more tax revenue.
