Undeterred by the indifference of a nation, Jim McDermott has introduced in the U.S. House of Representatives his second bill in a year calling for federal taxation of Internet gambling. That’s code for legalization, in case you didn’t know. The congressman is satisfied that bringing this giant illegal business into the regulatory mainstream, onto the home computers and mobile phones of millions of American consumers, is a good idea because it would generate billions for the U.S. Treasury, or so he believes.

McDermott also is one of 46 co-sponsors of fellow Democrat Barney Frank’s Internet Gambling Regulation and Enforcement Act and humbly refers to his own measure as a “companion bill” to Frank’s more detailed plan for legalizing and regulating remote gambling — and taxing it — which, again, is the key selling point here.

Frank makes no secret of what he thinks of the U.S. government’s view that there is much that is problematic about unlicensed, unregulated gambling operated by various straw entities from file servers in offshore tax havens.

It’s “one of the stupidest things I ever saw,” he has said.

Now in his third decade on Capitol Hill one imagines the Massachusetts lawmaker has seen some pretty stupid things too. As an example, he has been trying for years with no success to redirect Congress away from its longstanding enmity toward remote gambling, which as an illegal activity is proscribed by a list of federal laws as long as Mr. Frank’s arm, not to mention the laws of several states. The latest is the U.S. Unlawful Internet Gambling Enforcement Act, which was enacted in 2006 and forbids banks and financial services providers from processing Web gambling transactions.

You know what the congressman thinks of UIGEA, don’t you? You guessed it. “One of the stupidest laws ever passed,” he has termed it.

These days, since becoming chairman of the powerful Financial Services Committee, a position he was awarded after the Democrats took back the House in the 2006 mid-terms, Frank is playing to much larger audiences. But even he hasn’t been able to muster the votes to get his bill out of committee.

Its several “companions” are languishing in similar fashion.

McDermott’s had one co-sponsor as this went to press. That was Neil Abercrombie of the great state of Hawaii. “The Frank bill is the lead bill, and it must move first before Jim’s legislation,” a spokesman for the congressman explained.

Florida Democrat Robert Wexler had gotten one committee hearing for his bill to exempt poker from the federal fatwa, his argument being that it’s a game of skill.

Las Vegas Democrat Shelley Berkeley had one hearing last year on her bill calling for a study of Internet gambling by the National Academy of Sciences.

Berkeley is co-chair of the Congressional Gaming Caucus, and her bill is the only one endorsed by the American Gaming Association. This is worth mentioning because the AGA, the federal lobbying arm of the land-based casino industry, has a history of success when it comes to commissioning academic studies to promote its members’ image and economic agenda. The big Vegas-based operators that dominate the association have been hankering for years for a slice of the multibillion-dollar Internet pie. The problem is they also oppose federal taxation and regulation, which they hold to be the exclusive purview of the states where they operate. Indeed, they formed the AGA specifically to keep Washington as far away from their casinos as possible.

There is a double irony here because it’s this very states’ rights thing that must be finessed if remote gambling is ever to be viable as a legal industry in the United States. Seven states specifically prohibit Web gambling. Five more have issued opinions opposing its legality. Most of the remaining 38 don’t want it either. (McDermott’s own state of Washington classifies gambling on the Internet as a “Class C” felony, equivalent to possessing child pornography, threatening the governor or torturing an animal. Violators can be imprisoned for five years and fined up to $10,000.) Of the 50 state attorneys general, 49 are on record as supporting Frank’s “stupidest law,” and 45 have put their signatures to a letter to Congress opposing his legislative bid to undo it. Nevada’s was not one of them. No surprise there. But the big sports organizations whose games are the mainstay of the Vegas sports books — the NFL, the NBA, Major League Baseball, the National Hockey League and the National Collegiate Athletic Association — all have signed a strongly worded letter urging the members of Frank’s committee to resist any attempts to repeal UIGEA or water it down.

Frank’s response? He scheduled a hearing last month to examine the burdens UIGEA will impose on the banking and financial services industries charged with enforcing it. What did this hearing uncover? It was impossible to know, as of this writing. But I think the chairman tipped his hand when he said, “The hearing is going to show — I want to show — that it’s not that the regulations weren’t done well, it’s that they can’t be done well given the inherent nature of the issue.”

Then there is Oregon Congressman Peter DeFazio, who wants the office of the U.S. Trade Representative to disclose the details of concessions made to the European Union late last year that bought the EU off Antigua’s victorious World Trade Organisation complaint against the U.S. Web ban.

It might be a gross disservice to those crafty Old Europeans to suggest that they sold out their own gambling companies by waiting until little Antigua won its case before joining in the free-for-all for compensation, then got out quickly with whatever bennies they could wring without too much trouble — but that’s sure how it looks.

For some inexplicable reasons the Bush administration has classified the details of this on grounds of “national security”. DeFazio wants to know why. So do those gambling operators across the Pond. Antigua won its case by arguing that Washington’s policies are discriminatory because they exempt horseracing, which legally accepts Web bets in dozens of states. The Bush administration eliminated this apparent contradiction ex post facto by withdrawing gambling from the WTO’s General Agreement on Trade in Services, saying it was never intended that U.S. gambling policy be subject to the global free market. And how could it have been, given that the Internet was largely an unknown quantity back in the early ’90s when GATS was crafted? And also there are those prohibitions to contend with on the state level.

The Remote Gambling Association, infuriated by how Brussels played an apparent winning hand, has now gone to the European Commission claiming U.S. enforcement activities before the GATS withdrawal — measures that have included fines, forfeitures and the arrests of European nationals — still amount to discrimination. The association, which represents many of Europe’s largest Web gambling operators, has brought its case under the EU’s Trade Barriers Regulation, which obligates the Commission to respond. So now a Common Market awash in court cases over gambling industry protectionism and sloshing about in gambling-related sports scandals is investigating gambling in the United States with a view to achieving a “constructive and mutually satisfactory solution.”

James Rutherford is editor of IGWB. He may be reached by telephone at +1 702 794 0718 ext. 8707, or by e-mail at rutherfordj@bnpmedia.com.