I 

110TH CONGRESS 

1ST SESSION H. R. 2607 

To amend the Internal Revenue Code of 1986 to regulate internet gambling. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 7, 2007 

Mr. MCDERMOTT introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to regulate 

internet gambling. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Internet Gambling 

5 Regulation and Tax Enforcement Act of 2007’’. 

6 SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTER7 NET GAMBLING OPERATORS. 

8 (a) IN GENERAL.—Chapter 36 of the Internal Rev9 enue Code of 1986 (relating to certain other excise taxes) 

10 is amended by adding at the end the following new sub11 chapter: 

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1 ‘‘Subchapter E—Internet Gambling Operators 

‘‘Sec. 4491. Definitions. 

2 ‘‘SEC. 4491. DEFINITIONS. 

3 ‘‘For purposes of this subchapter, the following defi4 nitions shall apply: 

5 ‘‘(1) DIRECTOR.—The term ‘director’ means 

6 the Director of the Financial Crimes Enforcement 

7 Network. 

8 ‘‘(2) BET OR WAGER.—The term ‘bet or wager’ 

9 shall have the same meaning as in section 5362(1) 

10 of chapter 53 of title 31, United States Code. 

11 ‘‘(3) LICENSEE.—The term ‘licensee’ shall 

12 mean an Internet gambling operator licensed by the 

13 Director in accordance with this subchapter. 

14 ‘‘(4) INTERNET.—The term ‘Internet’ means 

15 the international computer network of interoperable 

16 packet switched data networks. 

17 ‘‘(5) LICENSE FEES.— 

18 ‘‘(A) LICENSE FEE.— 

19 ‘‘(i) IN GENERAL.—Each licensee 

20 shall be required to pay to the Director 

21 during each 30-day period of operation a 

22 license fee of 2 percent of all funds depos23 ited with or on behalf of the licensee by 

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1 any person for the purpose of placing a bet 

2 during the preceding 30-day period. 

3 ‘‘(ii) DISPOSITION.—Amounts col4 lected by the Director as license fees shall 

5 be deposited in the general fund of the 

6 Treasury and treated as revenue. 

7 ‘‘(B) DIRECT AND EXCLUSIVE OBLIGATION

8 OF LICENSEE.—The license fee shall be the di9 rect and exclusive obligation of the licensee and 

10 may not be deducted from the amounts avail11 able as deposits to the person placing a bet. 

12 ‘‘(6) APPROVAL OF LICENSE.—The Director 

13 shall grant licenses under this subchapter if, in the 

14 Director’s sole discretion, the applicant meets the 

15 criteria set by the Director and is generally fit to en16 gage in the business of Internet gambling. 

17 ‘‘(7) SAFEGUARDS REQUIRED OF LICENSEE.— 

18 No person shall receive a license under this section 

19 unless the person implements the following require20 ments with respect to any Internet bet or wager— 

21 ‘‘(A) appropriate mechanisms to ensure 

22 that all taxes relating to Internet gambling due 

23 to Federal and State governments from individ24 uals engaged in Internet gambling are collected 

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1 at the time of any payment of any proceeds of 

2 Internet gambling; 

3 ‘‘(B) appropriate mechanisms to ensure 

4 that all taxes relating to Internet gambling due 

5 to Federal and State governments from any 

6 persons licensed under this Act are collected as 

7 required by law; and 

8 ‘‘(C) appropriate mechanisms to ensure 

9 that the license fee is paid to the Director 

10 under subsection (e).’’. 

11 (b) CLERICAL AMENDMENT.—The table of sub12 chapters for chapter 36 of such Code is amended by add13 ing at the end the following new subchapter: 

‘‘Subchapter E. Internet gambling operators.’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall take effect on January 1, 2008. 

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