The November Nine tax debate

Why do some countries tax poker players on their winnings, yet others let them keep every cent?

Every year after the WSOP Main Event, estimates are released about how much each player actually took home after tax are released. It never ceases to surprise, even though we have seen it before, how different some countries are in their attitudes towards taxation of gambling winnings.

Every year there is at least once instance where, because of a heavy tax regime in one country, and a more generous one in another, you see one player take home more money than someone who finished higher than them. This year that was 7th place finisher Pierre Neuville who took home more than 6th place Thomas Cannuli and 5th place Zvi Stern.

You also always get at least one player who took home every cent they won, because gambling winnings are not taxed in their country. This year that was Pierre Neuville from Belgium, but arguably the biggest success in that regard was last year's champion Martin Jacobson.

The champ moved to London last year and as such, is reckoned to have kept every cent of his $10 million. With this in mind, this year's final table surprisingly didn't have anyone move to a tax haven during the four month break.

The real winner is the IRS

Then finally, the usually depressing part of the story comes when we look at the big American winners, who end up paying close to 50% on their winnings. This is in most part to the Inland Revenue Service, but they also pay a secondary tax at State level. As such, Joseph McKeehen is estimated to actually be only walking away with $4,297,394 of his $7,683,346 first prize.

When you consider that most professionals sell shares in their action too, then the amount they actually walk away with is often nowhere near the 'fuck you' money we associate with one of the richest prizes in all of sport.

It is no doubt particularly frustrating when you factor in that the IRS takes home so much money from poker players in a country that makes it very hard for them to play in the first place. I have a US-based friend who plays for a living who regularly laments that he has to give up half his winnings to a government who is trying to make him unemployed at the same time.

Point of consumption vs income tax

Why is it that somewhere like the UK allows players to keep 100% of what they win, and others try and take half of it? In the UK the Government has already decided that the money we wager on gambling has already been taxed, via our wages. Instead they take the tax from the rake at the point of consumption, from the poker room instead.

A high volume poker player in the UK arguably generates more tax than someone with a similar level wage, just by proxy via the online poker room rake generated, rather than directly from their income.

The main reason why there is such disparity from country-to-country over how poker is taxed is simply because it is too small an industry for most governments to understand. Poker is simply not on the radar of most tax departments, which is why some countries put poker players in with everyone else, while others allow them to slip through the cracks unnoticed.

It may seem unfair on both sides of the spectrum, but if poker teaches you anything, it is just pure variance, which other than moving to a tax haven, there is little we can do about. If you are from one of the more generous countries where poker tax is concerned, enjoy your unfair advantage because times and can do always change, especially where things like taxation are concerned.

Would you move to avoid getting taxed on poker winnings? Should professionals get taxed? What about recreational players? Let us know in the comments.

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