Ohio Takes First Step as Online Gambling Taxed

Lisbon clearly advances the notion that online gambling is not illegal, under any law not contorted beyond recognition of its purpose.

The gray area of law in which the online casino industry resides in the US  may have seen the first move toward clear legalization and regulation Monday as a small Ohio town updated its tax code to fit modern lifestyles and technology. The Lisbon Village Council placed a 1.5 percent tax on online gambling winnings, equivalent to other income.

Unlike the federal government, which insists on attempting to apply laws written before the Internet was conceived to online transactions, Lisbon saw a legislative need to address a changing world, and did so by properly taxing Internet betting. Acknowledging the need to create new law as times evolve, Lisbon Solicitor Virginia Babcock said, "The last time our tax code was updated online gambling really wasn't a factor."

Federal and state authorities have steadfastly refused to address the issue of Internet gambling as a new concept, instead relying on a mishmash of outdated state statutes and undefined and problematic bills like the UIGEA. The Wire Act, written to prevent bookies from handling action by telephone, has been twisted by the Department of Justice to try to attack online gambling.

Similarly, the Kentucky law against gaming devices was somehow construed to mean Internet domain names. Yet it took a little town in Ohio to face the future and realize existing law must be adapted to fit new circumstances.

By applying tax to winnings from Internet casinos, Lisbon clearly advances the notion that online gambling is not illegal, under any law not contorted beyond recognition of its purpose. Regulation of the industry as a whole then becomes the obvious next step.

 "Are you going to act, US Congress, or must a small village continue to lead you?" Sherman Bradley, OCA's in-house gaming expert, wants to know.