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

[ericicecream]

[ QUOTE ]
It would be 5% total...2.5% for Uncle Sam, 2.5% for the site. I just don't see how it could be done without charging more than $3 on a $100k PLO pot. And I don't see how Uncle Sam would allow a cap on their cut either since he doesn't give a lick about our winrate.

[/ QUOTE ]

Oops, meant to quote this one in my above response.

[Spook]

you can large number this, and get an average number of pots that are won by americans. Lets say 80%, then the poker site is paying 2% rake and collecting 3% rake for itself.

Irregardless of who actually wins the pot.

So if they want to make 5%, they up their rake to 7% rake and pay the 2.5% to USG on american pots which is 2 percent if 80% of players are american, and keep 5%.

So now everyone is taxed and the poker site makes its desired rate.

[KEW]

Three problems..

1..IRS will never do away with income taxes on gambling winning..If if they taxes every pot...Income taxes will still be paid by the winners..Plus your scheme ignores FICA taxes to "Pros"..

2..Sites will not be willing to cut there rake in half..This also infer the 2.5% would be on behalf of the players the sites would still be responsible for normal corporate profit taxes..Nor will foreign sites be willing to go along with it..

3..A uncapped 2.5% would bankrupt the games...That's 2.5% of EVERY pot leaving the game..At an avg of 60 hands per hours what's left in front of the players..This does not even take into consideration the "normal" house rake...

[bluefall]

[ QUOTE ]
Three problems..

1..IRS will never do away with income taxes on gambling winning..If if they taxes every pot...Income taxes will still be paid by the winners..Plus your scheme ignores FICA taxes to "Pros"..

2..Sites will not be willing to cut there rake in half..This also infer the 2.5% would be on behalf of the players the sites would still be responsible for normal corporate profit taxes..Nor will foreign sites be willing to go along with it..

3..A uncapped 2.5% would bankrupt the games...That's 2.5% of EVERY pot leaving the game..At an avg of 60 hands per hours what's left in front of the players..This does not even take into consideration the "normal" house rake...

[/ QUOTE ]


It's not a perfect plan I understand. I'm not sure what you said exactly in the first point but we all know the player that wins the pot pays rake. So, the player that wins a pot pays income tax by paying the tax rake....not separately reporting it as income to the IRS in April.

Sites would HAVE to go along with it or they'd be denied access to US players. If they didn't agree to it, guess what, Harrah's or whomever would certainly pop in and get a site up and running to take advantage of the opening. By reducing the amount the site earns per hand won by a US player, the site is essentially taxed. Therefore, no additional corporate tax would be instituted. A lot of industries are taxed differently so it's not crazy to think that the online poker industry can't have a separate tax code.

Plus the policy makers should be willing to agree to any plan that maximizes their tax. Without the rake, poker is a zero sum game. The only way to guarantee taxes are taken is to break it down to the pot level or just tax the site, since they're the only one guaranteed to make money.

Point 3 has merit. But, a full 5% is already charged in all micro games. They still run, though somewhat due to the constant influx of new players or bad players willing to reload. The tax would not need to be a full 2.5% though. Maybe 1% tax, 1% to site....or whatever ratios work. Capping the site's rake. I dunno.

Somebody else commented on the international community and their unwillingness to go along with this plan. Why would they care? Only American players pay the tax. What do I care if Canadians don't pay any tax on gambling winnings?

I've had the opportunity to think about this for a long time I've probably convinced myself it's a good option. It seems like a good idea to present things to Congress in more than just the standard way. Oh well.

[Tuff_Fish]

Good out of the box thinking Bluefall.

IF there were no other taxes involved, the player walked away with 100% of whatever he cashed out, the poker room walked away with 100% of their profits, then this is something that merits serious consideration.

BTW, doesn't the UK do something similar? My understanding is that gambling winnings are not taxed at the player level.

Keep thinking, and do some math.

Go on Poker Scout here and try to figure out how much the various goverment entities are missing out on this very minute. This assumes that the various gov entities share in the loot. 2 1/2 % is plenty, but the gov is always hungry. We would have to insure any such tax law was ironclad and the thieves in gov don't start a new tax on us on top of the 2 1/2%. An almost impossible task BTW.

Good job.

Tuff

[DeadMoneyDad]

[ QUOTE ]
[ QUOTE ]
Three problems..

1..IRS will never do away with income taxes on gambling winning..If if they taxes every pot...Income taxes will still be paid by the winners..Plus your scheme ignores FICA taxes to "Pros"..

2..Sites will not be willing to cut there rake in half..This also infer the 2.5% would be on behalf of the players the sites would still be responsible for normal corporate profit taxes..Nor will foreign sites be willing to go along with it..

3..A uncapped 2.5% would bankrupt the games...That's 2.5% of EVERY pot leaving the game..At an avg of 60 hands per hours what's left in front of the players..This does not even take into consideration the "normal" house rake...

[/ QUOTE ]


It's not a perfect plan I understand. I'm not sure what you said exactly in the first point but we all know the player that wins the pot pays rake. So, the player that wins a pot pays income tax by paying the tax rake....not separately reporting it as income to the IRS in April.

Sites would HAVE to go along with it or they'd be denied access to US players. If they didn't agree to it, guess what, Harrah's or whomever would certainly pop in and get a site up and running to take advantage of the opening. By reducing the amount the site earns per hand won by a US player, the site is essentially taxed. Therefore, no additional corporate tax would be instituted. A lot of industries are taxed differently so it's not crazy to think that the online poker industry can't have a separate tax code.

Plus the policy makers should be willing to agree to any plan that maximizes their tax. Without the rake, poker is a zero sum game. The only way to guarantee taxes are taken is to break it down to the pot level or just tax the site, since they're the only one guaranteed to make money.

Point 3 has merit. But, a full 5% is already charged in all micro games. They still run, though somewhat due to the constant influx of new players or bad players willing to reload. The tax would not need to be a full 2.5% though. Maybe 1% tax, 1% to site....or whatever ratios work. Capping the site's rake. I dunno.

Somebody else commented on the international community and their unwillingness to go along with this plan. Why would they care? Only American players pay the tax. What do I care if Canadians don't pay any tax on gambling winnings?

I've had the opportunity to think about this for a long time I've probably convinced myself it's a good option. It seems like a good idea to present things to Congress in more than just the standard way. Oh well.

[/ QUOTE ]


You are asking for too much politically.

To get on-line poker, you want to change on-line poker economics, gambling and corporate tax rates?

Pretty much a dead on arrival suggestion, IMO.

Uncollected on-line poker taxes is estimated at 3 Billion annually already.

The US market is already paying a 5% "excise tax" on deposits, through the UIGEA but collected by e-pass and the like.

Most of the corporate tax is currently uncollected by the US except for any earnings reported by US tax paying "owners".

To regulate the usual course is to require licensing fees to cover the new "costs" to the government.

I too think that any ultimate solution advanced should include a change in income taxes to individual players, and I "like the way you think", but as is this idea is dead politically.


D$D

[Richas]

The UK system is 15% of the sites gross profit to the taxman and no income tax. Even this is relatively unattractive to major sites (bookmakers have the same deal).

Someone said gambling should be treated as Income for Tax, many other places don't see it this way they take the money from the site and ignore the punter,

Shifting the tax with no increased rake to the site might help winning players and make little difference to losing players but it would hurt the sites at 50%, shoot 15% hurts. Plus it would never be competitive internationally and differentiated rakes/tax by nationality could not be WTO compliant.

IMHO a bit of a no hoper - go for a UK system and make clear the 15% of gross is more than the income tax on the few winers.

[ericicecream]

[ QUOTE ]
you can large number this, and get an average number of pots that are won by americans. Lets say 80%, then the poker site is paying 2% rake and collecting 3% rake for itself.

Irregardless of who actually wins the pot.

So if they want to make 5%, they up their rake to 7% rake and pay the 2.5% to USG on american pots which is 2 percent if 80% of players are american, and keep 5%.

So now everyone is taxed and the poker site makes its desired rate.

[/ QUOTE ]


...and 90% of the winning players become losing players due to the increased rake