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Study Shows Internet Poker Could Bring in $3 Billion in Taxes to US

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Regulating internet poker could bring the U.S. government over $3 billion in taxes annually, according to a study to be released on Tuesday, ahead of an expected debate over legislation to ban online gambling.

Income taxes on winnings from internet poker alone ? which is estimated to have attracted $60 billion in wagers worldwide in 2005 ? could amount to $2.5 billion each year, according to the study commissioned by the Poker Players Alliance, a group calling for the regulation of online gambling.

"The majority of the revenue that's generated would be from reporting of poker winnings," said Michael Bolcerek, president of the group.

The study also said that a 1 percent user fee on online poker transactions would generate another $800 million to $1 billion in revenue per year for the U.S. government.

The U.S. Justice Department says a 1961 law that forbids interstate telephone betting also applies to the Internet, making it illegal for the industry to do business in the country.

Authors of a bill expected to be debated in the U.S. House of Representatives on Wednesday, say their legislation would clarify that point for prosecutors. It would also prohibit gambling businesses from settling Internet wagers with credit cards, checks or fund transfers.

Among Web sites used by U.S. players to gamble are those run by UK-listed companies such as Party Gaming Plc and 888 Holdings.

The Poker Players Alliance says the fees and taxes that would come with regulation could deter some people from playing online, but Bolcerek said legalizing online poker would still lead to an increase in the number of players and revenue.

The Internet poker market is projected to grow 15 percent to 20 percent a year, according to the study.

"The reason why poker hasn't exploded as rapidly as it probably could have is because there is this overhanging legal question," Bolcerek said. "Once you remove that barrier ? that's going to more than compensate for any potential negative effect of people not playing the game because they are being taxed."

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