Online Poker - Keep it ILLEGAL

[grimReaper]

Why? Well, you already pay a 9% fee when you play tournament and already pay rake in cash games. On top of that, do you want to be taxed?

How much tax are we talking? Well, Uncle Sam takes 35% on short term capital gains (e.g winnings in stock market), and I don't think the politicians in D.C would take it easy on online gambling. The following site provides a little relief as it says gambling winnings are taxed around 25%: http://www.bankrate.com/finance/mone...-winnings.aspx. But still, 25% is a lot!

What are the benefits of legalizing online poker? Deep down inside, most of us are sure PS and FTP aren't rigged despite our bad beats, so I'm not sure what added regulation will provide. Even while these sites are illegal, we don't anticipate them shutting down to US players any time soon and losing are bankrolls. So is the slight added comfort worth it?

The only benefit I see w/ legalizing online poker is more competition. But is more competition going to make us better off? Is reducing the tournament rake from 9% to say 5% (which btw would only happen w/ alot of competition) or reducing cash game rake a few % going to make us better off, considering we may end up paying 25% tax on winnings?

Plus, do we want more competition? Do we prefer one site have 100k and another 200k (sort of like it is now) or 6 sites having 50k player each? It may not matter to those that play holdem b/c it's sufficiently popular, but it will matter to mixed game players. The network effects benefit both the site and the players.

There are many paradoxical things in economics. For example, there are theories that the current legality of drugs promotes crime! Maybe as poker players, keeping our favorite hobby a "guilty pleasure" isn't that bad after all.

Thoughts?

[travz21]

You're supposed to pay taxes on any gambling winnings anyways. And who would've known....a good portion of the working US already pays 25% of their income to taxes. Nothing would really be different besides the fact that a shit ton of new players will start playing because they'll be able to put money into an account much easier. They will also have peace of mind knowing they aren't doing anything illegally. The player pool will increase dramatically, which is beautiful. I can smell another poker boom.

[grimReaper]

You're supposed to pay taxes on any gambling winnings anyways. And who would've known....a good portion of the working US already pays 25% of their income to taxes.

Yeah of course, but paying tax on online poker would be enforced, like trading stocks online.

Nothing would really be different besides the fact that a shit ton of new players will start playing because they'll be able to put money into an account much easier. They will also have peace of mind knowing they aren't doing anything illegally. The player pool will increase dramatically, which is beautiful. I can smell another poker boom.

I agree, imo the majority of good players who want to play online are probably playing anyway, it's the not so good players that want to play online who would probably enter.

[RiverstarsVictim]

Living in UK I enjoy the freedom of choice in which site I play at any given time. I'm forever being bombarded with many different promotions from the many different sites, competition!, pokerstars offer me nothing. My winrate on FTP is probably half compared to say Boss Media network. Keeping it illegal in USA does nothing for the industry. If you're worried about paying taxes on your huge winnings, emigrate

[C8H10N4O2]

Since when is it illegal to play poker online?

[travz21]

Yeah of course, but paying tax on online poker would be enforced, like trading stocks online.

Yeah, you would no longer be a criminal by skimping out on paying taxes. How terrible.

[travz21]

Living in UK I enjoy the freedom of choice in which site I play at any given time. I'm forever being bombarded with many different promotions from the many different sites, competition!, pokerstars offer me nothing. My winrate on FTP is probably half compared to say Boss Media network. Keeping it illegal in USA does nothing for the industry. If you're worried about paying taxes on your huge winnings, emigrate

You have to pay taxes in the UK, too. There are a only a few livable countries that don't tax online poker winnings.

[pokerbucket]

Economist - you obviously haven't won enough money from online poker to where you would have to pay taxes on it... yes you are supposed to pay taxes on everything but even if you win a lot right now the IRS will know about it. If you are just a small stakes player than legalizing it won't make that big of a difference tax wise. The problem isn't that tilt and stars want to shut down to US players... the problem is that they might be forced to if the law changes again. In the past sites related to online gambling that have stood up against the government have been destroyed.. look up world sports exchange... remember neteller? By legalizing it 100% you won't have anything to worry about and as an American I would be proud to know that billions of the dollars that these sites are collecting in rake is going back into the economy... u should know that ur an economist

[RiverstarsVictim]

You have to pay taxes in the UK, too. There are a only a few livable countries that don't tax online poker winnings.

Got a link for that? I dont know anybody who has paid tax on their online poker winnings in UK. The last I heard was the bookmakers and poker sites operating in UK pay the taxes on their profits. As long as we dont declare it as income, we dont pay.

[travz21]

Got a link for that? I dont know anybody who has paid tax on their online poker winnings in UK. The last I heard was the bookmakers and poker sites operating in UK pay the taxes on their profits. As long as we dont declare it as income, we dont pay.

Right. As long as you don't declare income as income you don't have to pay taxes on it. We can do that in the US, too. It's illegal.

[RiverstarsVictim]

Right. As long as you don't declare income as income you don't have to pay taxes on it. We can do that in the US, too. It's illegal.

It's not income, it's winnings from gambling so nothing illegal. Same as if you won the lottery here, it's not taxable. The Inland Revenue aren't interested in taxing gambling profits as gambling losses would be tax deductible, there's a ton more losers than winners. Much better they tax the guaranteed winners such as the bookmakers, casinos etc.

[grimReaper]

Economist - you obviously haven't won enough money from online poker to where you would have to pay taxes on it...

I wasn't necessarily speaking for/about myself. Though I do expect to escalate in stakes w/ time.

edit:

I would be proud to know that billions of the dollars that these sites are collecting in rake is going back into the economy... u should know that ur an economist

How could I leave this part out lol? My post was measuring benefits only from the perspective of poker players. The government would benefit from added tax revenue, but poker players aren't going to benefit directly from it. As for other economic effects such as employment, I don't see employment changing too much. IMO, any increase in employment from more poker rooms would more or less cancel w/ reduced employment from casinos due to more competition. One could make an argument that employment would slightly decrease b/c online poker rooms are way more labor efficient, and one could make the argument of little to no change in employment b/c legal online poker won't make live players play less in casinos.

[C8H10N4O2]

It's not income, it's winnings from gambling so nothing illegal. Same as if you won the lottery here, it's not taxable. The Inland Revenue aren't interested in taxing gambling profits as gambling losses would be tax deductible, there's a ton more losers than winners. Much better they tax the guaranteed winners such as the bookmakers, casinos etc.

From what I have run across, it seemed like if gambling winnings were your only source of income, it might be taxable, but even then things had been overturned in appeals cases in the UK. As long as you have any other form of income though, it's definitely not taxable. But it seems pretty confusing reading of different cases, because there are a few contradictions.

[grimReaper]

Yeah, you would no longer be a criminal by skimping out on paying taxes. How terrible.

I'm not sure what you're saying here. You said you have to pay taxes on poker anyway, regardless of legality, I'm saying it's not enforced. So you, like I suppose the vast majority of poker players can get away w/out paying taxes currently. Playing poker is not criminal in most states, but hosting an online poker room is (somewhat). Now if it's legalized, it's likely to be enforced, and you'll be forced to pay taxes.

[C8H10N4O2]

I'm not sure what you're saying here. You said you have to pay taxes on poker anyway, regardless of legality, I'm saying it's not enforced. So you, like I suppose the vast majority of poker players can get away w/out paying taxes currently. Playing poker is not criminal in most states, but hosting an online poker room is (somewhat). Now if it's legalized, it's likely to be enforced, and you'll be forced to pay taxes.

The vast majority of poker players get away without paying taxes because the vast majority are losing players. I would guess that if your primary/only income is poker, it's a lot harder to get away with it than you think.

Hosting an online poker room is illegal if you reside in the US. It's not illegal for PokerStars or Full Tilt to host an online poker room.

[RiverstarsVictim]

From what I have run across, it seemed like if gambling winnings were your only source of income, it might be taxable, but even then things had been overturned in appeals cases in the UK. As long as you have any other form of income though, it's definitely not taxable. But it seems pretty confusing reading of different cases, because there are a few contradictions.

I agree it's confusing.

In short, gambling is a recreation and not a trade, as such it's exempt from Income Tax.

Many professional gamblers here do so legitimately without paying taxes. The taxman is well aware if he charges tax on winnings, he's also gonna have to pay out on losses. Given most gamblers lose anyway it's in the taxman's better interest to just put him in the non-employed category from the start. As long as he is using his own money to gamble, all the taxman will ask is he pays his voluntary National Insurance Contributions and keeps his records up to date. So long as the taxman is convinced he isn't trading eg running a card room as opposed to simply playing in a card room, it's very unlikely he'll get bothered.

[grimReaper]

The taxman is well aware if he charges tax on winnings, he's also gonna have to pay out on losses. Given most gamblers lose anyway it's in the taxman's better interest to just put him in the non-employed category from the start.

I don't know anything about UK tax law, but are you sure this is true? Definitely not true about the US.

[RiverstarsVictim]

I don't know anything about UK tax law, but are you sure this is true? Definitely not true about the US.

Likewise I dont know about US tax law. Here taxes work both ways where on a bad month/year/whatever period you can claim tax relief/rebate. It'd be chaos if all those gamblers who lost their salaries in the bookies started putting in claims against their losses.

[grimReaper]

Likewise I dont know about US tax law. Here taxes work both ways where on a bad month/year/whatever period you can claim tax relief/rebate. It'd be chaos if all those gamblers who lost their salaries in the bookies started putting in claims against their losses.

Actually nevermind. US will give a tax rebate up to $3k for capital gains losses, not sure if there's a similar law on gambling, and not sure if they'll run a similar program for online gambling. Curious, what's the max for tax rebate in UK?

[RiverstarsVictim]

Actually nevermind. US will give a tax rebate up to $3k for capital gains losses, not sure if there's a similar law on gambling, and not sure if they'll run a similar program for online gambling. Curious, what's the max for tax rebate in UK?

To be honest I dont have a clue to max rebates etc, I just pay what I'm told to pay when to pay etc. As long as it's not excessive I'll just hate it a little.

I will add, my previous posts have made the UK taxman sound generous, he certainly isn't, he's just not a fool. If a professional gambler crosses the line into trading, you can be sure he'll get stung.