What is your definition of Regulation?

[permafrost]

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Gambling is legalized and regulated at the state level.

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Congress has the authority to regulate interstate commerce. They could easily pass a law with respect to internet gambling that preempts state laws.

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So the 535 people sent BY THE 50 STATES to congress are going to pass a law that throws out gambling laws in those 50 STATES?

[Bilgefisher]

I think this thread has slightly derailed from the intended purpose.

Some suggestions? The taxation on internet gambling needs to be clear cut. How much should you be taxed, what is considered a business expense, what can you deduct, what should you include etc etc.

I think regulation and taxation will happen. The biggest problem is as poker player convincing congress on how much. Most people see a winning session and think that taking a chunk of that is no big issue. Poker players see the long run and how deeply that affects our profits and can take a winning player and make them a losing player. Heck many poker players don't fully understand variance and how it affects your profits. I think that should be the biggest consideration down the road. Competition between sites should fix any other regulation issues that may come into play.

On a side note(not to derail here): I don't think people fully appreciate how explosive the game will become if mgm or harrah's were to open to US players. Even joe pessimist will consider playing then.

[dustyn]

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Gambling is legalized and regulated at the state level.

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Congress has the authority to regulate interstate commerce. They could easily pass a law with respect to internet gambling that preempts state laws.

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So the 535 people sent BY THE 50 STATES to congress are going to pass a law that throws out gambling laws in those 50 STATES?

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He's not saying they will, he's saying they can.

[dragonystic]

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The taxation on internet gambling needs to be clear cut. How much should you be taxed, what is considered a business expense, what can you deduct, what should you include etc etc.

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The tax guidelines for gamblers/poker players are already well established. I wasn't aware that there was any possibility of these changing.

Taxation will be on the industry, i.e. the sites. The players are already required to pay taxes.

The sites will likely trickle down the costs of taxes to the customers, but what form this takes and how much is anyones guess.

I personally do NOT want regulation. The major sites are plenty safe. Regulation is just a fancy word for big brother to say 'gimme gimme gimme.'

[MrWookie]

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Just a quick statement/question:

I have cashed at several live tournaments including a close to 6 figure cash at this years WSOP. I have always just received a W2G form with no taxes taken at the time of the cash. I will pay taxes on those at the end of the year. What would be the difference with online poker?

What would prevent each site sending all US customers one W2G at the end of the year for their poker winnings on their site? Each site would have to monitor each players accounts for the whole year and send a W2G accordingly. We each would then pay taxes on this at the end of the year just like any other W2G. The online sites would be regulated and taxed like any other B&M casino. Obviously their increased costs would be passed down to the players through added rake or larger tourney fees.

Each site could send a yearly statement showing all deposit amounts, winnings, rake paid, tourney buyin fees, etc for tax purposes. Think of it like buying and selling stocks. You don't automatically pay taxes every time you buy and sell a stock during the year. You pay taxes or deduct taxes at the end of each year based on the overall profit or losses from buying and selling stocks.

Am I offbase here or missing something?

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This is exactly the vision I had. The site sends you a W2G every January with your gross winnings by session. Then you submit that along with the rest of your income tax stuff, which includes your itemized deductions. The online casinos (the ones based in the US, anyway) are taxed just like B&M casinos.

[Vidocq]

I agree with much of what has been said above. In an ideal world, there would be the "US Online Gaming Commission" -- a federal agency. The agency would:

* Charge sites a heafty annual license fee to cover the costs of the Commission.

* Have reasonable licensing requirements for operators, perhaps modeled on existing state gaming commission requirements.

* Have the ability to inspect the books and records of licensed companies.

The regulated sites would be required to:

* Keep all customer funds in a segregated account, i.e., not use them for operating purposes.

* Provide an annual W2G or other tax document to players, which the players would use for filing taxes.

* Pay taxes in the US.

* Have verifiably random dealing procedures.

* Comply with AML laws and OFAC regulations.

Another thing the Commission could do would be to have the power to combat cheating by players -- collusion, bots, etc.

Of course, it is extremely unlikely that any of this will ever happen. There is no real precedent for this type of federal regulation of a leisure time or sporting activity. There has, from time to time, been talk of a federal boxing regulator (something that is probably a good idea) but it has never gotten off the ground.

[ericicecream]

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I personally do NOT want regulation. The major sites are plenty safe. Regulation is just a fancy word for big brother to say 'gimme gimme gimme.'

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I agree, but I don't think we will stay status quo. If their is not a successful challenge by the WTO or other means, then I doubt we have seen the last anti-internet-gaming legislation.

Regulation may not be better than what we have today, but may be better than what is to come (assuming no successful challenge).

[DrewOnTilt]

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Would you advise foreign operation of poker rooms to continue, be banned, or work side by side with companies based on US soil?

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I'm not sure about U.S. trade law, but many countries require that foreign companies operating in certain business segments take on a minority ownership role only. For example, my employer's operation in India is a joint venture, and we own a noncontrolling stake of 49%. The joint venture partner is the primary party that is held accountable for proper market conduct.

I envision a scenario where a company such as Harrah's would partner with Stars or Party, with Stars or Party owning 49%. Harrah's would then be held accountable for tax reporting, audits, and other regulatory requirements.

[permafrost]

Article about the new law and how it will lead to regulation

This is a great read if you have not seen it.

[*TT*]

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I envision a scenario where a company such as Harrah's would partner with Stars or Party, with Stars or Party owning 49%. Harrah's would then be held accountable for tax reporting, audits, and other regulatory requirements.

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This is protectionisim. See the WTO case of Antigua vs USA for more info.

TT [img]/images/graemlins/club.gif[/img]