Proposal for Legalized Internet Gambling

According to today's NYT's, online poker alone is expected to be a $6 billion industry by in 2009 (growing from the $1 billion made in 2004.)

This is particularly impressive given 90% of the customers are potentially breaking the law (if they are playing in the US).

The Justice Department is not about to being interpreting the laws in a more accepting manner - so how about a more American (capitalistic) approach?

Think about this -- The biggest reason the law enforcement officials explain in continuing the fight over internet gambling is that since gambling institutions have (historically) had shady dealings with the underworld in money laundering - they can be manipulated by terrorists to move money around to support their actions.

Locally, with Federal tax cuts, states and local governments are struggling to maintain services (education, roads) with less Federal assistance.

Why not legislate that the payment processing servers must be managed in the US with revenue roughly equal to the local sales taxes paid out as some kind of "processing fee?"

We couldn't call it "sales tax" because all internet commerce would be covered and, as someone working in that space can tell you, it's not ready for that additional financial burden.

We tax alcohol and tobacco more heavily as a vice tax, why not gambling? So with 8% of $1 billion, maybe people could feel more comfortable capitalizing on something that's not going away any time soon...