Repeal of gambling bill gaining steam?

The chairmen of two powerful U.S. House of Representatives committees said Monday that the Bush administration should explore legislation to roll back a U.S. ban on Internet gambling instead of paying compensation to the European Union and other trading partners.

House Financial Services Committee Chairman Barney Frank, House Judiciary Committee Chairman John Conyers and six other lawmakers criticized the Bush administration's handling of the issue in a letter to U.S. Trade Representative Susan Schwab.

"Your agency has chosen not to consult with Congress, but instead to take what we view as a drastic step which could have significant consequences for the whole WTO (World Trade Organization) system," the lawmakers said.

Rather than comply with a negative WTO ruling in a case filed by Antigua and Barbuda, the U.S. announced earlier this year it was "clarifying" that it never intended to allow foreign firms to offer Internet gambling services as part of the 1994 Uruguay Round trade pact.

However, that opened the door for other trading partners to demand compensation for the United States' decision to retroactively exclude Internet gambling from its commitments under the General Agreement on Trade in Services.

The U.S. has been in negotiation with the EU, India, Japan, Costa Rica, Macao, Canada and Australia on a compensation package.

In the letter to Schwab, the lawmakers said they feared compensation would be "expensive to the U.S. economy. However, we are perhaps more concerned about what this withdrawal says about U.S. credibility as a trading partner."Frank has offered legislation to roll back the ban: HR2046, or the Internet Gambling Regulation and Enforcement Act (IGREA), which WagerWeb.com supports.

In fact, last week, Representative Earl Blumenauer from Oregon signed on as a new co-sponsor of the IGREA legislation.

Back in October 2006, Blumenauer voted in favor of the current Unlawful Internet Gambling Enforcement Act legislation, but he is now co-sponsor No. 41 of Frank's bill.

Meanwhile, a tax revenue analysis announced by Representative Jim McDermott of Washington estimated that regulating Internet gambling would generate between $3.1 billion to $15.2 billion in federal revenues over its first five years, and between $8.7 billion to $42.8 billion over its first 10 years.

"Even under the most conservative estimates, licensing and regulating Internet gambling - and collecting the taxes that are due - will provide much-needed revenue to the U.S. Treasury," said McDermott. "This is money we are currently losing to other jurisdictions, for no other reason than some of my colleagues' think we can actually stop people from gambling online. It is money we will continue to lose if we ignore the fact that if grown adults in America want to gamble online, they can and they will."

McDermott's Internet Gambling Regulation and Tax Enforcement Act would provide better protections against tax cheating and thus increase federal revenue from permissible Internet gambling activity.

McDermott's legislation functions as a companion bill to Frank's IGREA bill, which would establish a licensing and enforcement framework for regulated Internet gambling in the U.S.