Yesterday, Citizens for Responsibility and Ethics in Washington (CREW) filed an ethics complaint against Sen. John McCain for his failure to disclose gambling winnings on his personal financial disclosure forms. The McCain campaign’s response, reported in the Politico’s blog, The Crypt, is that Senate rules don’t require reporting of gambling winnings on personal financial disclosure reports.

This is flat out wrong.

Gambling winnings are earned income that must be disclosed. It’s not even a close call. Pages 33-34 of the Senate Ethics Manual state “the staffer who appears on Jeopardy and becomes a grand champion may keep her prize money and other winnings, as may the Senator who purchases the winning Powerball ticket.” The manual continues, “Such winnings must be reported by disclosing individuals as earned income.” What possible distinction can there be between lottery and game show winnings and money won at a craps table?

Some have suggested that because the IRS allows a person to net out his winnings and losses and report only the gain, the same rule must apply to personal financial disclosure forms. Wrong again. The IRS rules are designed to determine a person’s total income, but the Ethics in Government Act’s disclosure requirements are designed to identify all of a Member’s sources of income. So under IRS rules, if Sen. McCain won $2,000 at the MGM Grand on Saturday and then lost it all at the Venetian on Sunday, he wouldn’t have to report any net income from gambling. Under the Ethics in Government Act, however, he would still have to report the $2,000 he won at the MGM Grand as income of more than $200 from a specific source. Other members of Congress, including Sen. Judd Gregg (R-NH), House Minority Leader John Boehner (R-OH), and Rep. Paul Kanjorski (D-PA), all understand this rule and reported such winnings. Former Rep. Bob Ney (R-OH), on the other hand, went to prison, in part, for failing to properly disclose gambling winnings on his personal financial disclosure form.

The Senate Ethics Committee should investigate whether Sen. McCain failed to report his gambling winnings. And if the committee finds this failure to be deliberate, the matter should be turned over to the Department of Justice for a potential criminal inquiry.

This entry was posted on Friday, October 10th, 2008 at 11:47 am and is filed under Politics, Presidential Campaign .