Proposal to Tax Online Gambling to Fund US Healthcare Dies (Update)

Senator Ron Wyden has withdrawn his proposed legislation that sought to legalise and tax online gambling in the United States to help pay for healthcare reform (see previous report), reports the Washington DC publication The Hill.

And inevitably, industry observers are speculating whether the Senator was placed under pressure by fellow Democrats anxious to avoid yet more controversy around President Obama's already contentious initiative on healthcare.

In a statement to The Hill, Wyden's communications director said the Senator from Oregon did not want to introduce another controversial issue into the healthcare debate, and would pull his amendment from consideration.

Senator Wyden had offered the amendment to the healthcare bill the Senate Finance Committee began considering on Tuesday this week, suggesting that a tax on legalised online gambling could contribute toward health insurance subsidies.

"The last thing Senator Wyden wants to do is make it more difficult to expand subsidies for working families by introducing a new contentious issue to the debate," said Jennifer Hoelzer, the Senator's communications director. "So when he offers the amendment, he will do it with other funding mechanisms."

The Hill reports that while senior Democrats in the House also have offered support for the concept of taxing Internet gambling to pay for healthcare, the issue is unlikely to move forward.

The healthcare debate is already heated, and Democratic leaders in the Senate have signaled they do not want to introduce another controversial issue to the mix.

Regan LaChapelle, a spokesman for Senate Majority Leader Harry Reid from Nevada told The Hill: "Changing the laws regarding online gaming is a significant detour from healthcare, a detour that Senator Reid agrees is not appropriate at this time."

Internet gaming supporters in Congress, many of them Democrats, said they would consider similar measures. Representative Jim McDermott, who has already submitted a companion tax bill to complement online gambling legalisation proposals by the Democrat Barney Frank, said that he would consider such a tax.

Representative Frank himself said: "It's a great idea. Why should we leave all that money untaxed?"

Frank, chairman of the House Financial Services Committee, added that once his panel is done with reforming regulations governing the financial-services sector, he wants to bring his online gambling bill before the panel.

The Hill speculates that McDermott and other House Democrats could move to add the Wyden provision in conference, as members work to find a compromise between Democrats who want to provide generous insurance subsidies and those who want to contain the healthcare bill's costs.

Conservative Christian groups oppose the Wyden idea, saying that legalised online gambling will degrade family life.

Tom McClusky, vice president of Family Research Council Action said: "It is congressmen trying to take advantage of the situation," adding that the tax on Internet gambling would be paid by gamblers who need help.