Food For Thought: Why You Don't Really Want Legalized Online Poker
Friday, June 27, 2008
Am I the only one who thinks that legalization and taxation of online poker will ruin the game?
Let me put it this way. Did you win money last year? Did you declare the winnings? Exactly. If online poker was legalized and consequently taxed, the government would likely have access to the win/loss statements for American citizens. Next time you (or more accurately, Lucko), win an online tournament for $10,000, Uncle Sam will gladly take a percentage out of your profit. More likely than not, the taxes will be withheld by the sites, since any regulations will probably be stringently in favor of the government, under the guise that online poker could lead to money laundering or hiding of assets. The result is lower actual realized prize pools and less money in the poker community.
So, yeah, I would prefer online poker to be 'legal' on paper, but the reality would most definitely suck.
Until next time, make mine poker!
posted by Jordan @ 4:02 PM,
- At 5:47 PM, Gydyon said...
- At 6:58 PM, Gnome said...
Your implication is that you're currently evading taxes because the unregulated nature of online poker allows you to.
The reality would not suck for those of us who already are paying taxes.
- At 7:35 PM, $mokkee said...
regardless of the tax implications, the feds getting their grubby mitts into regulating online poker would just end up taking all the fun out of it.
i.e. less donkeys
they should just can the stoopid UIGEA bill and leave it alone.
- At 7:58 PM, Gnome said...
Apologies in advance for the double comment:
Online poker regulation would absolutely not take the fun out of it. Regulation would make it easier to get money in and out, legitimize the game, and open poker up to a lot of people who shy away because they think it's illegal.
There would be a ton of new donkeys after both the repeal of the UIGEA and regulation of online poker.
I'd love to play at harrahs.com and mgm.com. I can't imagine all the dead money and gigantic prize pools.
- At 2:31 PM, HighOnPoker said...
Feel free to comment as often as you like, Gnome. For a player earning significant money playing poker, there might not be much of a difference. But how about the guy who wins a random tournament and $1k for the year and finds out after the fact that he has to pay $350 extra in taxes months later.
And for the record, I pay all my taxes. I'm just looking at the big picture. There will be money removed from the gambling community, and I seriously think you overestimate the amount of people who avoid poker because they think it is illegal. Besides, those players are probably more conservative and will just make for more nits in the games. The action junkies that make games profitable are likely to play despite poker's quasi-legal nature.
- At 6:30 PM, Gnome said...
The guy who wins a random tournament for $1k should pay his taxes whether poker is regulated or not.
Maybe there aren't a ton of people who avoid poker because they think it's illegal, but I believe there are many people who avoid it because it isn't always easy to deposit and withdraw money (that's the argument I should have made in the first place).
I also think action junkies would be more likely to play poker if it's easier for them to manage their money.
- At 2:09 AM, Renee said...
Hmm, good comment, I never thought about it that way! I defintely do not want my winnings to be taxed, it's my pastime money that I am already taxed on!
- At 9:52 AM, Lucypher said...
I agree with Gnome. The UIGEA caused many fish and would be fish to drop out of the online poker community. It has also made it a lot more challenging to get money into and out of online poker sites. I think repeal of the UIGEA or at least rendering it moot would bring more fish back into the online game. That's +EV for all of us.
- At 4:01 PM, HighOnPoker said...
The overall question, though, is whether the +EV aspect of more players would offset the -30% or more than will leave the community via taxes.
- At 7:23 PM, Jamie said...
I think it would be a great thing for poker to be legalized.
First, there would most definitely be new blood injected into the system. Why? Because the casinos could start PROPER marketing campaigns. Not these cute little "not a gambling website" double talk deals they have now.
Second, legal nationwide online poker would force the government to start thinking about taxing online poker, or any poker winnings, differently. Perhaps new legislation could be pushed through.
What I mean is, right now poker winnings get taxed on an EVENT basis. Meaning, if I win $1000 in a tourney and tomorrow I lost $1000, at the end of the year I have to report $1000 more of income as well as take a $1000 deduction, if I itemize. Now, let's take this to the extreme. If I won $1000 and lost $1000 every day, the results *should* net out except that technically, my income would be $365,000 more than it should be. This could keep me from getting certain guaranteed loan advantages based on income, or keep my kid from getting a low cost student loan based on his father's income. Pretty shitty, right?
- At 3:16 PM, Patch said...
I agree with Gnome. Legalization would create a flood of new fish. Everyone I've ever spoken to about online poker who wasn't already playing has expressed concern about the safety of their money. If the sites were "licensed" by the government, these concerns would mostly go away.
Jamie, even worse than losing loan advantages, in your scenario the AMT would kick in and you'd probably lose most, if not all, of your deductions. Even though you'd have a net poker income of $0, you'd end up paying tax on $182,500 (you doubled the income if it's win $1000 today, lose $1000 tomorrow) of income you never really got. This is the incredible inequity of IRS regulations concerning gambling income.
- At 3:36 PM, HighOnPoker said...
Wait a sec, Patch. On one hand you say it would be good because there are more fish. On the other, you point out how taxing gambling revenue is unfair based on the current system. So, once again, do the fish offset the unfair gambling tax?
- At 3:47 PM, Alan aka RecessRampage said...
I think it should be legalized regardless of whether the new fish coming in would offset the taxes or not... because I paid a fair chunk last year (and I'm not talking about few hundred dollars). It's also a pain in the ass to keep meticulous records since you'lre technically supposed to gross up your winnings and losses. If the inability to evade taxes will get people away from poker, well, that's too bad. But those that are evading, I sure hope they get audited. This country could sure use the money to blow it on some other stupid cause.
- At 3:51 PM, Alan aka RecessRampage said...
One follow up... I don't mind seeing some sort of a tiered approach to taxes. I don't know how but if your winnings are less than x amount then you can be exempt or pay lower rate or something. I'm not saying to punish everyone out there or anything. Just make it right is all I'm asking.