poker and income tax laws |
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Posted Tue Jan 04, 2005 11:52 am GMT by capttrip55
Does anyone know about income tax laws on money made from playing poker online in the US? Thanks.
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Posted Tue Jan 04, 2005 12:08 pm GMT by flafishy
Legally, you must declare your gambling winnings. You can write off any losses up to the amount that you report as winnings.
Posted Tue Jan 04, 2005 12:30 pm GMT by darthsikle
income from all sources is considered income...legal or illegal.
if online poker is illegal, then you would not be able to deduct online poker losses from live poker winnings to arive at a net number
Posted Tue Jan 04, 2005 3:08 pm GMT by flafishy
| darthsikle wrote: | income from all sources is considered income...legal or illegal.
if online poker is illegal, then you would not be able to deduct online poker losses from live poker winnings to arive at a net number |
Good point I hadn't thought of. Income is income in Uncle Sam's eyes. Deductions are not deductions if they are not legal.
But that raises the question ... is gambling online illegal in the US? I don't think it is. It's illegal to run an online gambling site in the US, but I don't believe it's illegal to gamble on an offshore site. I believe that is a legitimate loophole.
Any tax lawyers or accountants out there care to chime in?
Posted Tue Jan 04, 2005 3:28 pm GMT by darthsikle
The justice department is cracking down, hence credit card companies not allowing you to charge your account. It is not out of the question for the justice department to announce (whether technically correct or not) that online losses are not allowable deductions.
Given that about 1% of returns are audited, no matter what you do, i wouldn't worry about it to much.
Posted Tue Jan 04, 2005 3:52 pm GMT by wEbMaStEr
I'm not an expert, but, as far as i'm aware, gambling "over wire" is illegal in the US. Internet comes under the heading of "over wire" so is illegal.
Posted Tue Jan 04, 2005 4:01 pm GMT by flafishy
| darthsikle wrote: | | Given that about 1% of returns are audited, no matter what you do, i wouldn't worry about it to much |
Yes, to get back to the original question, you are required to report your income from playing poker online. But the caveat, as Darth says, is that I doubt many people do so, and I doubt anyone gets into any trouble by not doing so.
| darthsikle wrote: | | The justice department is cracking down, hence credit card companies not allowing you to charge your account. It is not out of the question for the justice department to announce (whether technically correct or not) that online losses are not allowable deductions. |
Justice Department cracking down on what? Credit card companies not allowing you to charge has nothing to do with the question of legality. They put a stop to it because people were losing a bunch of money and then disputing the credit-card charges. A few of the bigger CC banks in the US started banning charges for offline gambling, and then the rest just fell into line. There is no legal reason for that, it's a policy adopted by the CC banks -- voluntarily and independently.
And the Justice Department has nothing to do with deductions on your income tax. That's the IRS. Would the IRS allow it? They might fight it, and they might pull some kind of trick and say that your documentation isn't proper or sufficient. But I don't think they could just flat-out disallow it.
Playing poker or casino gambling online is NOT ILLEGAL in the US. There are those who would like to make it so, and there are those who are investigating ways to make it so. I doubt that it will ever happen. As of now, there is nothing illegal about it.
Think of this: If playing poker online were illegal, or if casino gambling online were illegal, would you be seeing/hearing all these Poker Stars and sportsbook.com commercials on TV and radio? Hell, no. They'd never get away with that in this day and age of FCC crackdowns.
Posted Tue Jan 04, 2005 5:58 pm GMT by Scott1101
| wEbMaStEr wrote: | | I'm not an expert, but, as far as i'm aware, gambling "over wire" is illegal in the US. Internet comes under the heading of "over wire" so is illegal. |
You are correct, sir.
Go figure: Someone living in another country knows the law in the States better than most people living here.
Posted Tue Jan 04, 2005 6:05 pm GMT by Dr_Pablo
what if your internet is wireless?
or am i missing the point 
Posted Tue Jan 04, 2005 6:06 pm GMT by Scott1101
| Dr_Pablo wrote: | what if your internet is wireless?
or am i missing the point |
haha! good one!
Posted Tue Jan 04, 2005 6:37 pm GMT by Jauron
Another reason I heard Credit Card compaines won't let you use them is because it's too easy to steal somebodies Credit Card and get money out with internet poker.
Dunno..
Posted Tue Jan 04, 2005 7:45 pm GMT by fonzerelli_79
| Jauron wrote: | Another reason I heard Credit Card compaines won't let you use them is because it's too easy to steal somebodies Credit Card and get money out with internet poker.
Dunno.. |
thats a fair point actually
a few places use intermediaries like ecash to ensuure its safer
Posted Tue Jan 04, 2005 8:02 pm GMT by Imajica1975
So is it legal or illegal?
If it is legal, then why all the cloak and dagger stuff.
If it is illegal, then why do I see a Party Poker commercial on ESPN every 5 minutes?
I understand that REGULAR gambling laws go state by state, but this is different, as I am sure has been stated countless times before. If my friend is in Aruba at a poker table, he calls me on his wireless, and I play through him over the phone line, is that illegal? Because that is no different than playing on the internet.
USA just wants it illegal because they aren't getting a rake from it. They already get a 35-40 percent "rake" out of my paycheck every week but apparently that isn't enough. 
Posted Tue Jan 04, 2005 8:07 pm GMT by fonzerelli_79
| Imajica1975 wrote: | So is it legal or illegal?
If it is legal, then why all the cloak and dagger stuff.
If it is illegal, then why do I see a Party Poker commercial on ESPN every 5 minutes?
I understand that REGULAR gambling laws go state by state, but this is different, as I am sure has been stated countless times before. If my friend is in Aruba at a poker table, he calls me on his wireless, and I play through him over the phone line, is that illegal? Because that is no different than playing on the internet.
USA just wants it illegal because they aren't getting a rake from it. They already get a 35-40 percent "rake" out of my paycheck every week but apparently that isn't enough. |
go to a country with a different rake 
(woohoo the smilies are back :D )
Posted Wed Jan 05, 2005 12:41 am GMT by JohnnyCache
It's not legal or illegal - it's something that's evolving quicker then our gambling laws. You can place a wager in most parts of the US over the phone or on a televised event (IE off-track betting) . . . there are also places all over america where gambling is legal. If internet poker is illegal in cincinatti, is it legal in las vegas?
And as for the ads on ESPN, well, they are for services outside the country, right? So it's like advertising for pot in amsterdamn - it's legal there, so the ad isn't illegal. It's very tricky right now, very grey...so tell your legislators you favor online poker and, since messing with online poker is messing with your money, you vote based on the issue. And don't keep to much money at a time on a poker site.
Posted Wed Jan 05, 2005 5:21 am GMT by Verdi
Here in Sweden it's all tax free baby. We also have public health care so you won't have to pay high insurances either. (in essence: people with normal jobs will pay for you too...)
Only problem are bank loans and vacations. (but if you're a successful player you can probably afford to take a few weeks off anyway and won't need any loans)
I'm no poker pro myself though. I'm a consultant and doing ok with that. But if I do get good at poker I think Sweden is one of the best countries to be a poker pro in. (If you forget about the climate...)
Posted Wed Jan 05, 2005 5:34 am GMT by fonzerelli_79
...dont forget about the hot ladies with blonde hair who hang around in saunsa all day
(i must stop watching 'art' films)
Posted Wed Jan 05, 2005 6:12 am GMT by Verdi
| fonzerelli_79 wrote: | ...dont forget about the hot ladies with blonde hair who hang around in saunsa all day
(i must stop watching 'art' films) |
Yeah, obviously. :D But that goes without saying.
No, truth to be told many young Swedish gals are getting the McDonald's treatment and are becoming a bit on the fat side. Unfortunately... 
But there are exceptions of course.
Posted Wed Jan 05, 2005 6:37 am GMT by fonzerelli_79
| Verdi wrote: | | fonzerelli_79 wrote: | ...dont forget about the hot ladies with blonde hair who hang around in saunsa all day
(i must stop watching 'art' films) |
Yeah, obviously. :D But that goes without saying.
No, truth to be told many young Swedish gals are getting the McDonald's treatment and are becoming a bit on the fat side. Unfortunately...
But there are exceptions of course. |
say it isnt so!!!
all the swedish girls i met whilst travelling were gorgeous
Posted Wed Jan 05, 2005 7:14 am GMT by Verdi
Well, you know what they say about British women... :D
Posted Wed Jan 05, 2005 7:42 am GMT by ZIPPY
WHAT...exactly?
Posted Wed Jan 05, 2005 7:51 am GMT by Verdi
| ZIPPY wrote: | | WHAT...exactly? |
Well, they are not, hmmm, exactly known for their stunning beauty.
In general. 
Posted Wed Jan 05, 2005 7:52 am GMT by Dave B
In the US, I pay less than 20% in state and federal taxes. W/ my wife staying home w/ the kids (one income), 2 kids and a giant mortgage (all decuctions) my taxable income is pretty small.
So I dont mind paying my own health insurance. I am still WAY ahead.
BTW-MN full of Swedes, Norwegians and Germans....blonds galore.
Posted Wed Jan 05, 2005 8:15 am GMT by Verdi
| Dave B wrote: | In the US, I pay less than 20% in state and federal taxes. W/ my wife staying home w/ the kids (one income), 2 kids and a giant mortgage (all decuctions) my taxable income is pretty small.
So I dont mind paying my own health insurance. I am still WAY ahead.
BTW-MN full of Swedes, Norwegians and Germans....blonds galore. |
I've read that the US is the only western country where the government doesn't provide health care for everyone.
What happens if you are involved in a car crash and doesn't have an insurance? Do they let you die? Or do you get a shitload of debt if you survive? And if you die, do they make you relatives pay? How does it work?
Good, you're ahead. Perfect. Then why bother about the others who are not ahead? They can only blame themselves, right? Or maybe reality isn't that easy? Let's say that your parents are drug addicts or just plain poor, then what chances do you have of getting a good education and a good job in the US? Your system benefit those who already are ahead. I think it's a bit unfair.
I know I wouldn't be sitting here in front of my computer at my well paid job if we had the same system as you have. I would never have been able to afford my education.
Ok, enough politics for one day. This site is about poker.
ps. A Swedish girl would in most cases never accept being a housewife. There's so much talk about equality between the sexes here. I feel it's going a bit too far at times. Sure, they might look good. And they might be friendly at their vacation... But don't be fooled. They are real bitches in reality.
Posted Wed Jan 05, 2005 9:13 am GMT by darthsikle
http://64.233.167.104/search?q=cache:j1Vgn47b9i4J:www.cardplayer.com/poker_magazine/archives/%3Fa_id%3D14257+%22Justice+Department%22+%2B+%22Internet+Poker%22&hl=en
Please see link for back up on my positions. Here are selective quotes:
Credit card companies Largely stopped alowwing credit card betting due to fear of authorities:
Largely out of fear of action by federal authorities (and also partly because of a high percentage of charge-backs), most U.S. credit card issuers no longer permit transactions for online poker (although not all banks are following the regulations). PayPal, the largest, and most trusted and respected Internet payment system also refuses to allow transactions to and from online poker sites.
The Justice Department does have purview and in fact has an interest in Internet Poker...in fact, they are going after stations that accept money for das for online poker:
Today's online behemoth PartyPoker used television advertising, largely associated with the World Poker Tour, as a principal tool for building its customer base. This worked powerfully, until the day the feds seized $3 million or so that Party had paid in advance to the Discovery Channel for ads, stating the money was for advertising to promote an illegal purpose. TV (and radio) advertising to promote our industry is a risky proposition these days!
Other options are slowly being choked off as a vehicle for promoting online poker. The Justice Department sent warning letters to publishers, radio stations, and Internet sites that sell advertising around the country, advising them that accepting advertising from online gambling sites, including online poker sites, would be a crime, subjecting them to possible prosecution and fines. A number of legal experts have expressed that the Justice Department's grounds for taking this position are spurious at best, but the chilling effect, especially when coupled with the seizure of Party's money from Discovery, is quite real./url
Posted Wed Jan 05, 2005 9:55 am GMT by flafishy
Again, I'll say it is illegal for an online casino/poker room to operate in the US. It is not illegal for me to use an online casino/poker room that is based offshore.
Everything in between right now is spurious. Nothing has ever been put to a test in the court system.
There have been a few crusaders in government and high-level law enforcement (John Ashcroft, who is gone now, being the highest-profile one) applying pressure and finding ways to cut the flow. I have read that the crusaders have decided that the best way to attack is by trying to cut off the flow of money. So pressure has been applied to credit card companies and the likes of PayPal to stop the flow -- who have cut off access voluntarily and independently, not under some legal edict. That pressure has probably contributed to the companies' decision to cut those ties, but I promise you that it did not directly cause it. They cut those ties because they were losing money to fraud and regretful customers.
US banks, on the other hand, which are federally regulated and have a strict set of laws and guidelines they must follow, have not cut off the flow -- because they cannot just decide not to do business with a particular entity if it is not an illegal venture. Ironically, it is the federal banking guidelines that prevent the federal crusaders from applying pressure to banks.
Pressure has also been applied to media outlets that take advertising from the online operations. A couple folded in the early going, but most have not (I'm sure after their lawyers researched the issue and told management there's nothing illegal about it).
Ashcroft and his merry men and women have never made an arrest of someone utilizing an offshore gambling site not because they didn't want to but because they had no grounds to. So they've had to devise end-around plays to try to block this activity, and they've been largely unsuccessful.
Remember the original Napster? Napster itself wasn't illegal, but people were doing illegal things with it. So law enforcement was eventually successful in shutting the thing down by going after the people like you and me who were doing illegal things.
Don't you think that if our use of online poker rooms was illegal, they would have come after us by now, before it got out of hand? They haven't. What does that say?
Posted Wed Jan 05, 2005 10:36 am GMT by Dave B
I wouldnt respond just to argue, but you did ask some questions, so I will answer.
What happens if you are involved in a car crash and doesn't have an insurance? Do they let you die?
Hospitals are not allow to deny treatment to anyone.
Or do you get a shitload of debt if you survive? And if you die, do they make you relatives pay? How does it work?
You may get a ton of debt. There is assistance everywhere or you can apply to the hospital for them to reduce a bill. If you cannot handle the debt and there are no other options, you can declare bankruptcy. Then your debt is wipe clean, you keep your home and in most cases everything else, but the have to pay higher interest rates for years until your credit history improves. If you have a network of friends, people will come together to help you out, people help people, Govt shouldnt have to.
Good, you're ahead. Perfect. Then why bother about the others who are not ahead? They can only blame themselves, right? Or maybe reality isn't that easy? Let's say that your parents are drug addicts or just plain poor, then what chances do you have of getting a good education and a good job in the US? Your system benefit those who already are ahead. I think it's a bit unfair.
You are right, if you parents are drug adicts you are screwed. Is that different in Europe? Healthcare is likely the least of your problems. Most employers cover 1/2 to 2/3 of healthcare costs. If someone doesnt have health insurance, it is likely a matter of choice. People talk about how 30% (dont know the exact amt-but something like that) dont have health insurance. But, everyone has a car or two, 4 TVs w/ cable and more. They simply dont feel like the cost is worth giving up other things.
IMO, there isnt that many in the USA that cant afford healthcare. They either dont want to get a 2nd job, they made poor choices in life (had kids too young, didnt take school seriously, started taking drugs) or choose to spend money on other things. Why should the rest of us pay for others poor choices. I may slowplay when 2 suited cards hit on the flop even when I know that some is on a flush draw. But that is a risk that I assume, and if things go bad, I deal with it. I bought a house that I thought our family needed (more room, better schools), but we really couldnt afford on my income. So at 29 years old, I delivered pizza 2-3 nights a week. If poker hadnt come along, I would still be doing that. I chose to work more to pay for the things that I felt our family needed instead of giving up some things that we had become accustomed to. BTW-anyone can make $15-20 per hour delivering pizza w/ any junkie car and little education. And they are ALWAYS hiring.
Posted Wed Jan 05, 2005 10:59 am GMT by fonzerelli_79
personally i think healthcare should be provided - but i have been brought up in a country which provides it. If i had been brought up in the us i would probably have a different view
regardless, think this thread is steering off topic into a my country is better than yours type thread.
Lets get back to talking about the legality issue (remember how the thread started !)
Posted Tue Jan 11, 2005 10:04 am GMT by flafishy
Don't like revisiting old debates once the discussion has died down. But I did want to share this.
I just discovered this site: www.pokerupdates.com. A very cool Web site.
Anyway, there is a report here on this very topic ... well, not on tax laws but on the legal status of online poker.
Essentially, it boils down to that the poker police wannabes have not been able to find a law that applies to online gaming. So they're trying to create one.
Posted Tue Jan 11, 2005 10:35 am GMT by BMiller1980
| Dave B wrote: | I wouldnt respond just to argue, but you did ask some questions, so I will answer.
What happens if you are involved in a car crash and doesn't have an insurance? Do they let you die?
Hospitals are not allow to deny treatment to anyone.
Or do you get a shitload of debt if you survive? And if you die, do they make you relatives pay? How does it work?
You may get a ton of debt. There is assistance everywhere or you can apply to the hospital for them to reduce a bill. If you cannot handle the debt and there are no other options, you can declare bankruptcy. Then your debt is wipe clean, you keep your home and in most cases everything else, but the have to pay higher interest rates for years until your credit history improves. If you have a network of friends, people will come together to help you out, people help people, Govt shouldnt have to.
Good, you're ahead. Perfect. Then why bother about the others who are not ahead? They can only blame themselves, right? Or maybe reality isn't that easy? Let's say that your parents are drug addicts or just plain poor, then what chances do you have of getting a good education and a good job in the US? Your system benefit those who already are ahead. I think it's a bit unfair.
You are right, if you parents are drug adicts you are screwed. Is that different in Europe? Healthcare is likely the least of your problems. Most employers cover 1/2 to 2/3 of healthcare costs. If someone doesnt have health insurance, it is likely a matter of choice. People talk about how 30% (dont know the exact amt-but something like that) dont have health insurance. But, everyone has a car or two, 4 TVs w/ cable and more. They simply dont feel like the cost is worth giving up other things.
IMO, there isnt that many in the USA that cant afford healthcare. They either dont want to get a 2nd job, they made poor choices in life (had kids too young, didnt take school seriously, started taking drugs) or choose to spend money on other things. Why should the rest of us pay for others poor choices. I may slowplay when 2 suited cards hit on the flop even when I know that some is on a flush draw. But that is a risk that I assume, and if things go bad, I deal with it. I bought a house that I thought our family needed (more room, better schools), but we really couldnt afford on my income. So at 29 years old, I delivered pizza 2-3 nights a week. If poker hadnt come along, I would still be doing that. I chose to work more to pay for the things that I felt our family needed instead of giving up some things that we had become accustomed to. BTW-anyone can make $15-20 per hour delivering pizza w/ any junkie car and little education. And they are ALWAYS hiring. |
Lol i did the same thing. Except in Upstate SC you would only make 10-14 and hr But I have cashed out more money this month in poker than i made in 3 months of delivering pizza.
But dayum, some girls thought I looked hott in that Pizza Hut uniform. lol
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