I 
113TH CONGRESS 
1ST SESSION H. R. 3491 
To amend the Internal Revenue Code of 1986 to regulate and tax Internet 
gambling, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 14, 2013 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on 
Education and the Workforce, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to regulate 
and tax Internet gambling, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Internet Gambling Regulation and Tax Enforcement Act 
of 2013’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment is expressed in terms of an amendment of a section 
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or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Rev-
enue Code of 1986. 
SEC. 2. TAX ON INTERNET GAMBLING. 
(a) IN GENERAL.—Chapter 36 (relating to certain 
other excise taxes) is amended by adding at the end the 
following new subchapter: 
‘‘Subchapter E—Internet Gambling 
‘‘Sec. 4491. Imposition of Internet gambling license tax. 
‘‘Sec. 4492. Record requirements. 
‘‘Sec. 4493. Elective State and Indian tribal government online gambling tax. 
‘‘Sec. 4494. Regulations. 
‘‘SEC. 4491. IMPOSITION OF INTERNET GAMBLING LICENSE 
TAX. 
‘‘(a) INTERNET GAMBLING LICENSEE.— 
‘‘(1) IN GENERAL.—There is hereby imposed a 
tax on each Internet gambling licensee in an amount 
equal to 4 percent of all funds deposited by cus-
tomers making deposits while located within the 
United States during the preceding month into an 
account maintained by that Internet gambling li-
censee or any agent of that licensee that can be used 
for the purpose of placing a bet or wager as defined 
in section 5362(1) of title 31, United States Code. 
‘‘(2) PERSONS LIABLE FOR TAX.—The tax im-
posed by subsection (a) shall be the direct and exclu-
sive obligation of the Internet gambling operator and 
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may not be deducted from the amounts available as 
deposits to the person placing a bet. Notwith-
standing the preceding sentence, any person making 
a deposit for the purpose of placing a bet or wager 
with a person who is required but has failed to ob-
tain a license pursuant to subchapter V of chapter 
53 of title 31, United States Code, shall be liable for 
and pay the tax under this subchapter on all such 
deposits, but such liability shall not excuse any fail-
ure to pay the tax on the part of the person who is 
required but has failed to obtain such license. The 
person making the deposit shall not be liable for the 
tax on deposits in cases of fraud. 
‘‘(b) UNAUTHORIZED BETS OR WAGERS.— 
‘‘(1) IN GENERAL.—There is hereby imposed a 
tax on any person who accepts a bet or wager and 
who is not authorized pursuant to section 5383(b) of 
title 31, United States Code, to accept such bet or 
wager. 
‘‘(2) AMOUNT OF TAX.—The amount of such 
tax shall be equal to 50 percent of all funds depos-
ited into an account that can be used for placing a 
bet or wager within the meaning of section 5362(1) 
of that title. 
‘‘(c) CREDITS FOR RETURNS OF FUNDS.— 
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‘‘(1) IN GENERAL.—There shall be allowed as a 
credit against the tax imposed by this section an 
amount equal to the sum of the following taxes 
which are paid on any funds returned by or on be-
half of an Internet gambling licensee to the account 
of a customer: 
‘‘(A) The tax imposed by this section. 
‘‘(B) Any State or Indian tribal Internet 
gambling tax imposed under section 4493(b). 
‘‘(C) Any tax imposed on overseas Internet 
gambling under section 4493(d). 
‘‘(2) LIMITATION.—The amount allowed as a 
credit under paragraph (1) with respect to a cus-
tomer may not exceed 12 percent of the funds re-
ceived in deposits from the customer. 
‘‘(d) WHEN DUE.—The tax imposed by this section 
shall be due at by the end of each calendar month with 
respect to deposits during the preceding month. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter— 
‘‘(1) INTERNET
GAMBLING
LICENSEE.—The 
term ‘Internet gambling licensee’ means a licensee, 
as defined in section 5382 of title 31, United States 
Code. 
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‘‘(2) DEPOSITS.—Deposits made by or on be-
half of an Internet gambling licensee of Internet 
gambling winnings or returns of funds by or on be-
half of an Internet gambling licensee to the account 
of a customer shall not be treated as a deposit for 
purposes of this section. 
‘‘SEC. 4492. RECORD REQUIREMENTS. 
‘‘Each person liable for taxes under this subchapter, 
except for a person making a deposit who is liable for 
taxes pursuant to section 4491(a)(2), shall keep a daily 
record showing deposits (within the meaning of this sub-
chapter), in addition to all other records required pursuant 
to section 6001. 
‘‘SEC. 4493. ELECTIVE STATE AND INDIAN TRIBAL GOVERN-
MENT ONLINE GAMBLING TAX. 
‘‘(a) IN GENERAL.— 
‘‘(1) PAYMENT OF STATE AND INDIAN TRIBAL 
GOVERNMENT
TAX.—On a monthly basis, each 
Internet gambling licensee shall pay to each quali-
fied State and each qualified Indian tribal govern-
ment an amount equal to the monthly pro rata State 
and Indian tribal government online gambling tax. 
‘‘(2) MONTHLY PRO RATA ONLINE GAMBLING 
TAX.—For purposes of this section, with respect to 
a qualified State and a qualified Indian tribal gov-
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