Assess Online Gambling to Fund USF, Levin, Horrigan Say
The move wouldn't raise prices for consumers, the two said.
Jake Neenan
WASHINGTON, Oct. 2, 2024 – How to fund the Federal Communications Commission’s $8-billion-per-year broadband subsidy is an ongoing problem for policymakers. Two industry experts have a new idea: collect fees on online gambling revenue.
“While there is a current tax” on online gambling, “we would propose raising it to fund some, if not all, of the USF program,” Benton Senior Fellow John Horrigan and Brookings Non-resident Senior Fellow Blair Levin wrote in a Tuesday blog post for the Benton Institute.
The Universal Service Fund, which supports rural broadband infrastructure and internet discounts for schools and healthcare centers, is currently funded by fees interstate voice revenue.
The problem – aside from an ongoing legal effort to dismantle the fund – is that the pool of money has steadily shrunk since the fund was set up in 1996. The FCC’s planning to collect fees equaling 35.8 percent of interstate voice revenue in the fourth quarter of 2024, its highest contribution factor ever.
Lawmakers from both parties and chambers of Congress have been working to modernize the fund for more than a year. The group working on the issue asked FCC Chairwoman Jessica Rosenworcel for her input back in January, and she showed a preference for assessing fees from online advertisers. Rosenworcel said she feared adding big tech companies or broadband providers to the contribution pool – both proposals that have been floated by other lawmakers and FCC commissioners – could end up making prices higher for consumers.
An advantage of tapping online gambling, Levin and Horrigan said, is that it’s a far less complicated revenue stream than the technology companies being considered.
“It provides a steady and, unfortunately, growing revenue stream that can be relied upon,” the two wrote. “And its revenue opportunities are sizable enough to be part of a meaningful broadband subsidy solution.”
They pointed to reports showing the online gambling industry brought in about $19.5 billion in revenue in 2023. The most recent FCC monitoring report put the USF contribution base for the first half of 2023 at about $17.6 billion, and projections from the time estimated about another $16.7 billion for the second half, for a total of roughly $34.3 billion. The agency will release updated data in its 2025 monitoring report.
“It is never easy to assess a new tax on a sector. But if the tech and communications sectors were to align in support of the using such assessments to fund USF, the political odds would improve.” they wrote. “In short, if government is going to sanction something with proven harms, why not tax it to fund something with proven benefits?”
