Australian Taxes?

[BruceN]

Josem, a poker player does not use a "system" when betting, which is what the cases mean by systematic. Many variables affect the decision as to whether to bet in poker, your opponent, your position, the cards etc.I undertand what you are trying to say, but this is not what is meant by systematic when reference is made to the cases in my view.

Reading between the lines of the cases it appears that the system seemed to be able to affect the consequent odds offered, to the extent that the chance factor was almost eliminated. This fact is what is likely to tip the court, as in the horse racing case (which set the precedent for aussie case law) the punter not only had business premises and was very close to the bookies, but had intimate knowledge of the industry. The way he bet was systematic.

In the greyhound case he owned dogs and would place bets on behalf of others, his whole life revolved around the industry. Again, his betting virtually eliminated chance as a factor in the outcome, due to his superior industry knowledge.

So systematic is more a reference to both betting patterns and also how the enterprise is conducted, ie in a business premises, with employees, etc.

In fact, looking at the detail of some of the judgements, the fact that cards are random makes it very unlikey in my view the courts would ever rule poker to be a game that eliminates chance as a factor.

cheers

Bruce

[Josem]

[ QUOTE ]
Josem, a poker player does not use a "system" when betting, which is what the cases mean by systematic. Many variables affect the decision as to whether to bet in poker, your opponent, your position, the cards etc.I undertand what you are trying to say, but this is not what is meant by systematic when reference is made to the cases in my view.

[/ QUOTE ]

I still disagree with you.

I think that developing significantly sized computer databases, extensive hand analysis and review (hello 2p2), regular playing patterns, data mining, good table selection, are all parts of a systematic way of playing the game.

I think that using a number of variables to make your bet is precisely what makes professional poker playing systematic.

The horse example that you use is of an expert punter who takes the many variables - track condition, horse form, jockey form, forecast weather, trainer preparations, etc., - to make a +EV bet. This is exactly analogous to a poker player using the incomplete information available to him to make a bet. Clearly, a horse punter also has incomplete information - he doesn't know if the jockey just tripped and hurt himself that morning, he doesn't know if the horse is going to scratch himself on the stalls, he doesn't know if a seagull is going to scare the horses.

[ QUOTE ]
Reading between the lines of the cases it appears that the system seemed to be able to affect the consequent odds offered, to the extent that the chance factor was almost eliminated.

[/ QUOTE ]
Clearly, it is not possible for a mere punter to change the likelihood of a particular horse winning - if that is happening, that's called fixing races, and I assume that is illegal in itself.

What they can do is to adjust the market to the extent that they are able to fiddle the odds that are offered - just like a good poker player. They obviously can't change the odds of their hand winning (in a literal sense, except through bluffing and other moves, which is further evidence that there is skill in this game), but they can change the odds that they are paid.

Presumably, there's a consensus amongst people on this board that poker is a game of skill. If poker is a game of skill, it follows that there is a systemic way of analysing the decisions (hello EV, hello ICM, hello theory of poker) and making +EV decisions.

[ QUOTE ]
This fact is what is likely to tip the court, as in the horse racing case (which set the precedent for aussie case law) the punter not only had business premises and was very close to the bookies, but had intimate knowledge of the industry. The way he bet was systematic.

[/ QUOTE ]

There are many businesses run from home. A player playing at home, who has a PC, presumably has "business presmises."

In addition, I would assume that a poker player would have an intimate knowledge of this industry.


You also comment on the way the gambler bet as being systematic.

Presumably, when you play poker, you are not randomly throwing money into the pot (if you are, PM for home game details). You are using a thought process on how to place a bet. This is systematic.

[ QUOTE ]
In the greyhound case he owned dogs and would place bets on behalf of others, his whole life revolved around the industry. Again, his betting virtually eliminated chance as a factor in the outcome, due to his superior industry knowledge.

[/ QUOTE ]
Datamining is the equivalent of this.

[ QUOTE ]
So systematic is more a reference to both betting patterns and also how the enterprise is conducted, ie in a business premises, with employees, etc.

[/ QUOTE ]
I still think that a professional poker player plays poker predominantly systematically (look at that alliteration).

[ QUOTE ]
In fact, looking at the detail of some of the judgements, the fact that cards are random makes it very unlikey in my view the courts would ever rule poker to be a game that eliminates chance as a factor.

[/ QUOTE ]
Clearly, chance is a factor. Clearly, however, in the horse racing example, there was still chance in which horse won. If not, it seems self-evident that:
a) bookmakers would stop taking his bets
and
b) if he had 100% success rate the whole industry would be over

[ QUOTE ]
cheers

Bruce

[/ QUOTE ]
While I obviously disagree with you, I appreciate that this is actually a mature discussion on these boards and that we can actually discuss this stuff as adults.

party on,
Mick

[Poker CPA]

Josem;

How does an auditor determine your point of "that developing significantly sized computer databases, extensive hand analysis and review (hello 2p2), regular playing patterns, data mining, good table selection, are all parts of a systematic way of playing the game."

And your comment "I think that using a number of variables to make your bet is precisely what makes professional poker playing systematic.", could apply to any poker player.

An ATO case is based on facts and circumstances. How is he going to find the "data mining", the 2 + 2 information, databases, table selection, etc etc. He has to build a case. How does he do it, from a practical standpoint. He can't, unless the player (or his rep) lays it out completely for him. After hearing "I got lucky playing poker online", what is the auditor going to do to determine this player's "system". I understand your point but its not a "real life" situation.

[vilemerchant]

I think the 'business test' is very important and in our favour. Clearly, if the ATO want to rule that winning poker players are entrepeneurs operating a business for profit, they would also have to rule that losing players are operating a loss-making business. Just imagine if a highly succesful businessman who donks off a lot of money online could claim his losses as a tax deduction for his overall 'business'.

That said, there's also no reason at all to make any noise that might bring you to the ATO's attention. IF they see all your money with no declared income they will likely be asking where it came from. Maybe it's better if they don't see a lot of that money and then maybe don't ask about it..

I also agree with the advice of keeping your cashouts large and every few months rather than your bank account appearing like you're drawing a 'weekly wage'. There are also cashout methods which avoid your bank account altogether, and there's no law against paying your living expenses in cash. Just be prepared to fully and truthfully explain yourself if the time comes.

[Josem]

[ QUOTE ]
I think the 'business test' is very important and in our favour. Clearly, if the ATO want to rule that winning poker players are entrepeneurs operating a business for profit, they would also have to rule that losing players are operating a loss-making business. Just imagine if a highly succesful businessman who donks off a lot of money online could claim his losses as a tax deduction for his overall 'business'.

[/ QUOTE ]

Sure, there are other public policy issues here - but I suspect that losing gamblers, who only play recreationally, will, by definition, not be able to claim that their poker is a business.

There is a fairly clear track record of people losing court cases in that effort.

[ QUOTE ]
That said, there's also no reason at all to make any noise that might bring you to the ATO's attention. IF they see all your money with no declared income they will likely be asking where it came from. Maybe it's better if they don't see a lot of that money and then maybe don't ask about it..

[/ QUOTE ]

What's this? The Glenn Wheatley school of tax advice?

[ QUOTE ]
I also agree with the advice of keeping your cashouts large and every few months rather than your bank account appearing like you're drawing a 'weekly wage'. There are also cashout methods which avoid your bank account altogether, and there's no law against paying your living expenses in cash. Just be prepared to fully and truthfully explain yourself if the time comes.

[/ QUOTE ]

The goal of this discussion is to not avoid an audit. The purpose of this discussion is to determine whether people have a tax liability.

While some people may be able to hide themselves, others:

a) can't

and

b) don't want to

If I were to ever play full-time, I don't want to be breaking the law. I want to abide by it, because that has other consequences for my options down the track.

[stevoL]

great discussion guys...man so I read all that and still dont know we I/we stand...my dad used work in the ATO and just had a big debate with him, I was kinda debating and from the standpoint Josem is here...things do look positive for us, but it doesnt pay to be ignorant abotu something, and I know for that I dont want to intentionally hide

I play fulltime and dont know what to do really, Im quite happy to not pay tax obv if thats the case, but its always best to find out everything, whats the next step to finding more information, a tax lawyer mayb, or waste of money? blah

keep the discusion alive!

[stevoL]

ok read a bit more, is this 'Evans' case the famous case ppl are talking about?...if thats goign to set a precedent then we are fine, because as phil mentioned - unless the ATO can take our computers and see we're using pokertracker etc there is jsut no way of them knowing we are betting systematically and operating as a 'business', they cant dig into our thought processes and disguinush between us and some lucky donk winning can they?

I think my mind is kinda at ease for a little while at least

[Josem]

[ QUOTE ]
whats the next step to finding more information, a tax lawyer mayb, or waste of money?

[/ QUOTE ]

for your own personal situation, i'd strongly suggest that you consult a professional. while people on these boards are convincing, they (including myself) are essentially anonymous posters on a discussion board.

apart from anything else, if you do make a decision on the basis of the advice of a professional, you might be able to have a stronger defence if you get into trouble.



for the broader situation, there will eventually be a court case (or, theoretically, legislation, although this is politically unlikely) on this issue which will provide further guidance.

in the meantime, you have to estimate where you fall on the balance of the six tests highlighted above. i suspect most professionals will fall afoul of it; others suspect not. either way, your individual circumstances are likely to have a huge impact. for example, if you're also receiving a chunk of income from being a RB affiliate, you're massively more likely to be considered a business. if you don't use pokertracker, you're less likely to be keeping the records expected of a business, and so on.


this is not taxation and/or legal advice. see an accountant and/or lawyer if you want some

[Josem]

[ QUOTE ]
unless the ATO can take our computers and see we're using pokertracker etc there is jsut no way of them knowing we are betting systematically and operating as a 'business', they cant dig into our thought processes and disguinush between us and some lucky donk winning can they?

[/ QUOTE ]

...or they could read your posts on an internet message board.

...or they could see your regular bank deposits.

...or they could just take your PC - i assume that this is not uncommon in taxation cases currently.


if the glenn wheatleys of the world can get caught (and he's a seriously smart cookie with a series of apparently complicated arrangements), how do you realistically think you're going to keep your activities secret? why do you think US players are scared of audits if it is so easy to hide your money?