Democrat says expect online gambling bill Thursday

[permafrost]

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Question on the taxes of the proposed bill. Which of the following is likely to happen? Lets for the sake of argument assume you are a professional player and you make 100K this year.

A. There is a mechanism put in place to forcibly withhold what you owe to the IRS. The site directly pays them according to our tax laws.


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Sounds like answer A. is the plan according to the bill...

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‘‘(3) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling

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[Jeffiner99]

Quote:
Question on the taxes of the proposed bill. Which of the following is likely to happen? Lets for the sake of argument assume you are a professional player and you make 100K this year.

A. There is a mechanism put in place to forcibly withhold what you owe to the IRS. The site directly pays them according to our tax laws.




Sounds like answer A. is the plan according to the bill...

Quote:
‘‘(3) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling.


Sounds to me like you are going to have to have one hell of a huge bankroll to survive this. Suppose you make 10k the first month. You are not rich. You make 100k a year, but hey, you live on that. So you have to cash out each month. They take 3k for taxes. Next month you lose 20k. They don't take out anything. Following month you win 10k again. They take out 3k for taxes again. So far, as far as I count, you are dead even for the four months but have 6k missing from your bankroll for your taxes. You better have a hell of a large bankroll to take all those hits. Oh sure, you may get it back at the END of the year, but by then you are busted, your house is gone and you are living in your car. It takes money to make money.

Oh, yeah, this will be just great.

Say goodbye to the professional online. Say goodbye to the fish. (They will be eaten alive by the taxes and the rake.)
Say hello to the online gambling ghost town.

It won't matter if poker is legal or not. What kind of moron would agree to play online with those restrictions? What kind of person has the money to fade this? As a professional you will know you can't fade this. As a newbie it will soon become clear to you. This is a huge hit.

What will happen next if we agree to this? Embolden the IRS to collect taxes out of live games as well? As soon as you go to the cage, you have to take out 1/3? 2/3s of your winnings and hand it over? I mean, if online poker players have to do this, then why not the cash games. That is only fair. What will that do to the action in the casinos?

Ok, so now we are left scrambling to play underground in people's houses and if caught are felons and sent to jail?

This is the bill you WANT passed?

Look to the future. See it coming.

Video killed the radio star and Frank's bill killed the poker stars.

Ya'll better go back to school and gets a real job. And the real kicker: poker players themselves are voicing support for this bill! WAKE UP! As Ben Franklin said "those who would give up liberty for security deserve neither." You are giving up a LOT OF YOUR LIBERTIES for this bill in the mistaken belief that it will make it safer for you to play online and it will be "legal." It is LEGAL now!

Tell Barney Frank you see right through his bill. Tell him to go jump in a lake. Ending poker in order to try to save it is absurd. At least the politicians admit they are putting a gun to your head, don't help them pull the trigger.

I know you want to believe the dream: American poker rooms everywhere advertising on TV and bringing in tons of fish for you to feed off of. But the shark is right behind you taking a bigger bite out of your hide. Don't be blinded by the dream. See it all. See it in all of its horror.

One day we all look back and wonder what happened to those days when players could actually make a living playing poker and realize, oh, yeah, we fell for that Barney Frank bill hook, line and sinker and he tricked us and it killed the profession and the industry. I was wondering why a democrat would be trying to help gamblers. Now I know. He is trying to help them into extinction.

[JPFisher55]

Hey, Jeff, when are you going to realize that the player is not engaged in the business of wagering, only the website. This section is about collection of taxes from the operator not the player.

[permafrost]

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Hey, Jeff, when are you going to realize that the player is not engaged in the business of wagering, only the website. This section is about collection of taxes from the operator not the player.

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No, operator taxes are in the paragraph below that says

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(4) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from any licensee are collected as required by law.

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Player taxes are in a paragraph that I will requote so you can reread at your leisure. I will even highlight the relevant phrase so you can see it makes no reference to a business.

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(3) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling.

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[Jeffiner99]

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Hey, Jeff, when are you going to realize that the player is not engaged in the business of wagering, only the website. This section is about collection of taxes from the operator not the player.

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No, operator taxes are in the paragraph below that says

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(4) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from any licensee are collected as required by law.

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Player taxes are in a paragraph that I will requote so you can reread at your leisure. I will even highlight the relevant phrase so you can see it makes no reference to a business.

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(3) Appropriate mechanisms to ensure that all taxes relating to Internet gambling due to Federal and State governments and to Indian tribes from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling.

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Sorry JFisher, Permafrost and I are correct. According to the bill that Barney Frank has introduced, the online sites will have to collect taxes from each and every player before they can cash out, each and every time they cash out. Since it says taxes due to the State and Feds we can only assume that will mean Federal Income Tax, State Income tax, Social Security tax, Medicare/medicaid tax and all the rest of the taxes that come out of a paycheck wherever you live. It might even include city taxes and worker's comp in some jurisdictions like NY and CA, but that part is a guess. The language does say ALL taxes due, so I would imagine I am right.

I hear your knee-jerk reaction to me and I don't blame you. I too wanted this bill to be our Saviour. However, it is filled with the kind of things that politicians put in bills to take more power and money from the people. I believe this bill was designed to go after the lazy-good-for-nothing-gamblers and collect as many taxes as possible from them. If you don't believe me, see the bill itself that states as one of its purposes:
"Licensing and regulating Internet gambling in the United States would provide additional tax revenues, and would reduce tax avoidance."

They want your money pure and simple. I wish I could get behind this bill. But it doesn't repeal the UIGEA, it GIVES IT TEETH. It is an addendum to the bill, defines what is now considered legal and what is not, and puts so many strings on the industry that it will cripple online poker.

I don't know why I am getting so attacked from everywhere. I am only trying to point out what I believe will happen if this bill passes. I am not trying to rain on anyone's parade. I am only trying to prevent the hurricane from hitting.

[Jeffiner99]

Here are some more gems from that lovely bill:

The rest of the bill is filled with many blank checks that you don't have a clue what you would be signing up for. Things like: all licensed casinos must agree to "Such other requirements as the Director may establish by regulation or order."

What other requirements? Who is this Director? Do you realize that by agreeing to this you are saying the US Gov't can do anything they want to at any time and the operator will lose its license if they don't agree. What kind of businessman would agree to that clause? Once this is in place any politician that comes along can use this clause any way they want. Of course, I imagine there will be a fortune spent in lobbying to make sure this clause doesn't get too out of hand. But what if you get someone in office somewhere down the road who thinks gambling should be banned outright. This clause would give them the ability to do just that for all intents and purposes. For example, what if this Director decides that All Internet operators must pay 90% of all profits to the US treasury in order to continue operating? This clause gives them the power to do that. Or any one of a million other things. Only your imagination is the limit.

Bills that are this broad used to be Unconstitutional because they were overly broad, vague and ambiguous. Nowadays however, the Constitution rarely gets read and things like this pass all the time.

I am not chicken little. The sky really is falling with this bill. Really! Barney Frank double-crossed us. But then why should that surprise us?

I will leave you with one more gem from the bill:
All licensed casinos must put in place "Appropriate safeguards to combat compulsive Internet gambling." Any idea what that means? No, me either. It could mean anything from an hourly limit, a daily limit, a monthly limit all the way to a forced confinement in a mental institution if you are deemed a compulsive gambler (and perhaps they deemed that if you lost more than 5k in a year you were a compulsive gambler).

I know, I know, you are saying I am going way to far. But show me the language that would prevent them from going that far.

Once you hand over the power you don't get to take it back and say "I don't like how you are using this. I change my mind." That is why it is so dangerous to get the government involved. I would rather take my chances with a poorly worded UIGEA than with this one that has more bite than bark.

I cannot emphasize this enough. This bill ADDS more stuff to the UIGEA, it doesn't repeal it.

You have to know you are being tricked because he keeps calling it a repeal. The UIGEA is found in the United States Code chapter 53 of Title 31 Section IV. This bill will be in Chapter 53 of Title 31 but will be Section V. That should tell you I am right. The very first words of the bill are: "Chapter 53 of Title 31, United
4 States Code, is amended by adding at the end the following new Subchapter..."

Amended, not repealed.

Up till now poker is not illegal to play online. After this, I doubt you will be able to play in an unlicensed site without breaking the law.

What if he had been honest and said "I want to pass a new bill to make sure that we tax the piss out of online players, have a way to see their accounts whenever we want without a warrant or even a suspicion of wrongdoing and add a few clauses that can be expanded to just about anything we like as we deem it necessary. I will do my best to eliminate all competition from the American market, and make sure there is a mechanism in place for me to get TONS of money from the gaming lobbyists." Would you go for that?

[JPFisher55]

Jeff, I won't convince you but consider that no player could ever owe taxes to an Indian tribe. All the sections about taxes and tax collection refer to the licensed operator; not the player.
I do agree that I would prefer the government not regulating online gambling, but this bill is better than the UIGEA.
A player gambling at an unlicensed site would not be violating any laws but the site would be. However, an offshore operator won't care just like all the offshore sportsbetting sites that have violated the Wire Act.
This law will reverse the regulation of ewallets, which is what the banks desire. This will make it possible to play at unlicensed and licensed sites.
Thus, I believe that the taxes and regs will be not be so burdensome to make licensed operators competitive with offshore licensed operators. Clearly we disagree about this matter.

[Jeffiner99]

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Jeff, I won't convince you but consider that no player could ever owe taxes to an Indian tribe. All the sections about taxes and tax collection refer to the licensed operator; not the player.
I do agree that I would prefer the government not regulating online gambling, but this bill is better than the UIGEA.
A player gambling at an unlicensed site would not be violating any laws but the site would be. However, an offshore operator won't care just like all the offshore sportsbetting sites that have violated the Wire Act.
This law will reverse the regulation of ewallets, which is what the banks desire. This will make it possible to play at unlicensed and licensed sites.
Thus, I believe that the taxes and regs will be not be so burdensome to make licensed operators competitive with offshore licensed operators. Clearly we disagree about this matter.

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We don't disagree. We are not reading the same clause. Read clause 3. An online casino must have a mechanism in place to ensure that all persons who play on line shall have all taxes due to the States AND Federal And Indian tribes collected by the casino at the time of any payment of any proceeds. I agree. Most of us will probably not owe any taxes to Indian tribes. But the clause is not exclusive, it is inclusive. It says States and Feds and Indian Tribes. So unless you are not an American you will owe taxes to the State and the Federal government.

Here is the clause again verbatim:

"Appropriate mechanisms to ensure that all
taxes relating to Internet gambling due to Federal
and State governments and to Indian tribes from
persons engaged in Internet gambling are collected
at the time of any payment of any proceeds of Internet gambling."

"(All licensed internet operators must make sure to have in place) Appropriate mechanisms to ensure that all
taxes (all taxes) relating to Internet gambling due to Federal (The federal government of the USA)
and State governments (of the USA) and to Indian tribes from
persons engaged in Internet gambling (that means the players) are collected (by the online casino)
at the time of any payment of any proceeds of Internet gambling."

You are right. There is another clause that discusses what taxes the sites themselves must pay, but this clause specifically states that the sites must collect taxes from the players before they can be paid their winnings.

Also, this does not replace the UIGEA, it adds on to it. It is not a repeal. It is an addition to the UIGEA. It gives the UIGEA more teeth, not less. It defines what is considered legal poker playing and by extrapolation defines what will be illegal poker playing: for example, playing poker on unlicensed sites. I would share in your enthusiasm if the bill were written the way you seem to be reading it. But it is not. If you think I have it wrong, please point it out to me. Please explain how that clause doesn't say that they will take all state and federal taxes out of your payouts. Because that is how I read it.

The bill also says:
"No person shall engage in the business of Internet betting
or wagering in the United States without a license issued
by the Director in accordance with this subchapter."

That clause is what I think will make it illegal for any unlicensed operator to stay in business in the US. The part about not being allowed to bet or wager seems to apply to both the operators and the players. Do you disagree?

[JPFisher55]

Jeff, the clause "and to Indian tribes" means that it cannot apply to taxes owed by a player because a player cannot owe taxes to an Indian tribe; but an operator can owe taxes to an Indian tribe. Even if your interpretation is correct, other than submitting a 1099 it will be impossible for a site to withhold taxes due any goverrnmental agency because a site cannot know if such taxes are due. A player could win $ at one site and lose more $ at another site at the same time and not owe any income taxes. This clause at worst refers to some possible reporting process.
Yes, an unlicensed operator would be violating the law by servicing the US market. However, many sports betting sites, including some trading on the LSE, have done so for years. This law, in practice, but not under the law, will make it easier for US citizens to access unlicensed sites because the same ewallets will service both licensed and unlicensed sites. Thus, in practice, this law removes the enforcement actions of the UIGEA required by the US banking system.
In addition, some US operators will obtain the license and give online poker players many more options than at present. It is not perfect, it does not fully comply with the recent WTO decision, but it is better than the present situation.

[Jeffiner99]

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Jeff, the clause "and to Indian tribes" means that it cannot apply to taxes owed by a player because a player cannot owe taxes to an Indian tribe; but an operator can owe taxes to an Indian tribe. Even if your interpretation is correct, other than submitting a 1099 it will be impossible for a site to withhold taxes due any goverrnmental agency because a site cannot know if such taxes are due. A player could win $ at one site and lose more $ at another site at the same time and not owe any income taxes. This clause at worst refers to some possible reporting process.
Yes, an unlicensed operator would be violating the law by servicing the US market. However, many sports betting sites, including some trading on the LSE, have done so for years. This law, in practice, but not under the law, will make it easier for US citizens to access unlicensed sites because the same ewallets will service both licensed and unlicensed sites. Thus, in practice, this law removes the enforcement actions of the UIGEA required by the US banking system.
In addition, some US operators will obtain the license and give online poker players many more options than at present. It is not perfect, it does not fully comply with the recent WTO decision, but it is better than the present situation.

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You write: Even if your interpretation is correct, other than submitting a 1099 it will be impossible for a site to withhold taxes due any goverrnmental agency because a site cannot know if such taxes are due. A player could win $ at one site and lose more $ at another site at the same time and not owe any income taxes.

This is my point exactly as to why this is unfair to gamblers. They will not care what you lost at the other site. They will just take out the withholding from what you have won and if you end up overpaying tax then perhaps you can get it back at the end of the year. So to you it feels like you are breaking even or perhaps losing, but to the gov't you won on a certain site and they get their cut. Now, the only way you can get your money back is to claim your losses as a part of your itemized deductions at the end of the year. But what if you don't have enough itemizations to make it worthwhile to itemize and you are better off taking the general deduction? Then too bad, so sad for you. You can't deduct your losses.
Many people can't itemize because it doesn't make sense for them. If you don't own a house you will rarely be in a position to itemize. (House owners get to deduct the interest income from their taxes and that is usually more than the standard deduction).

So you have put your finger on exactly why this would be so unfair. You could be losing your butt off but still have to pay taxes at the one site where you won something.

Why do you think I am so against this? I am on YOUR side.

This law also makes it crystal clear as to what is an illegal site, something the law doesn't do so well right now. It also doesn't repeal the UIGEA, it adds to it. So now, you have the banks backed into a corner. If the site is not licensed then it is illegal to do business in the US and if the bank does business with that illegal site it will be in big trouble (See the UIGEA). So instead of more unlicensed sites operating, this act will make them all criminals and will force then out of business. This little bill, despite its pretty sounding name is really a wolf in sheep's clothing. It does not repeal the UIGEA it gives it teeth.

This will create fewer sites for gaming, not more, and may eliminate sports betting altogether. Again, why do you think I am so against this?

I am on your side. I don't want you to get ***** by this. I don't want to get ***** by this either.

I am only trying to help. Sheesh. It is tempting to try to read a bill the way you wish it would be carried out, but bills are like men, they tell the truth. If they say they don't want to get married, they mean it. If a bill says the operator must collect money from each player for taxes before they can cash out, it means it. Even if that seems very unfair.

It is unfair. This bill is very unfair to poker players. I wish it wasn't. But it is.

What on earth could be my motive for lying to you? I am a poker player too!!! I want poker to be around. Online, off line, home games, everywhere.

I don't want to grab on to any bill at any cost. While this bill will make it easier for large American casinos to take over the industry, it will cost all of us a lot of money and may end up ruining the games altogether.

I don't think that is worth the trade. So far, I can still play poker if I want to. I am not willing to trade that privilege for this bill.