Regulating online poker and sites by "taxing" the rake?

[bluefall]

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I don't know of any state that taxes gambling in the way you describe. Typically, the tax would come in the form of a percentage of the casino's win (or the casino's total rake in the case of poker), or the casino's corporate profits. The consumer never actually "sees" the tax. I don't know why it would be any different for internet gambling.

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But the consumer still needs to pay income tax. The entity that is affected the most is the poker site, since the rake they charge will be half as much as they received from American players before.

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So you are suggesting that internet gambling winnings be exempted from income tax? This is never going to happen, nor should it. Gambling winnings (at least net winnings) are income. To not tax them on the same scale as wages would be unfair to everyone who has a real job.

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Everything in the tax code already is unfair to somebody. Why should the rich have to pay a higher percentage of their income? Why are session winnings reported as income but losses as deductions? That's unfair to poker players already.

How much are poker players contributing as tax now? $500 million? What about the $$ the IRS loses when people claim the maximum deduction? I have no idea what either value could possibly be. But let's assume the IRS nets more with this method than they do by the current standard. Why would Congress not agree to a system that nets more tax, regardless of how fair it "seems" to be to the regular worker?

I never thought this far ahead but I would assume the poker player would be ineligible for any normal deductions. Maybe a tax accountant can offer their insight.

[NickMPK]

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How much are poker players contributing as tax now? $500 million? What about the $$ the IRS loses when people claim the maximum deduction? I have no idea what either value could possibly be. But let's assume the IRS nets more with this method than they do by the current standard. Why would Congress not agree to a system that nets more tax, regardless of how fair it "seems" to be to the regular worker?


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Well, the system that would net the most taxes would be to tax the sites and have gambling winnings be reportable as income (or tax each pot and have gambling winnings reportable as income). Why wouldn't Congress just do this?

Congress is never going to exempt gambling winnings from the income tax. Never. Such a proposal will lose 90% of the politicians who already support online gambling. You also add additional complication to the tax code, which no one wants (since you are now distinguishing online gambling from land-based gambling).

To find a realistic potential system of taxation for poker sites, you might want to consider looking into how gambling operators are currently taxed at the state level.

[Lottery Larry]

"but I would assume the poker player would be ineligible for any normal deductions. "

If they are a professional gambler, that isn't true. The gross wins/gross deducted losses is only for casual gamblers.

"Why should the rich have to pay a higher percentage of their income? "

They can afford to do so, having more disposable income...and since they most likely didn't earn it all by themselves, I don't have a lot of sympathy.