2/28/10 – The US state that achieved international notoriety by attempting to seize international online gambling domains on protectionist and moral grounds – Kentucky – has just passed a law designed to tax….online gamblers!
The new law, which enjoyed an easy passage through the Kentucky House on Friday, capitalises on federal legislative carve-outs that permit online wagering….as long as it is on horse racing, fantasy sports and state lotteries. The exception has seen America embarrassed internationally in the World Trade Organisation for its disciminatory treatment of other forms of online gambling.
House Bill 368 now goes to the state Senate and was sponsored by a Democrat, Larry Clark, who is the House's temporary Speaker. The bill proposes a tax of half a percentage point on ADW (advance deposit wagers) made by any resident in Kentucky using Internet or telephone services, and was approved in the House by a vote of 85 to 8.
The current proposal is getting more support than a similar effort last year by Clark which proposed a 3.5 percent tax and was thrown out by the House Appropriations and Revenue Committee.
If passed, it could ultimately impact online punters using sites such as Churchill Downs' Twin Spires.com, although the proposal is that the tax would be extracted from account wagering companies as is done in Virginia and Illinois.
It has been estimated that the new tax could raise some $400 000. However, the Legislative Research Commission is less sure, pointing out that the dearth of information on how much money Kentuckians bet through the Internet and telephone makes an accurate calculation impossible.
The income from the tax will be distributed equally between the Kentucky Horse Racing Commission, whichever Kentucky track is running at the time and to that track's purses.