R.C. wants a piece of brothers gambling winnings (Canadian tax)

[Neko]

Two Canadian brothers successfully fought Revenue Canada when it wanted a piece of their sports betting winnings.

Not sure whether a judge would rule similarly in the case of a poker player but seemed like it might be semi-relevant.

According to a radio spot I heard these guys have made millions on the government-run sports betting "lottery" by comparing Vegas bookmaker odds with the odds of the sports lottery and betting large when there was a discrepancy.

Here is a link to a cbc article on the subject (article is pretty skimpy)

cbc article

[DavidNB]

There is a difference. Sports lotteries are tax expemt including this case. The governement tried to claim that these brothers were a busniness and therefore should be taxed.

[Neko]

The parallel I saw was that poker winnings at the charity casino's are also tax exempt.

If a player found a "way to beat the system" (as quoted from the article) say by reading SSHE and made a million dollars playing poker and R.C wanted a piece, would they not be tried in a similar manner? If so could they not use a similar defense?

[myst1]

I recently won $170k at a WPT event in Niagara Falls and the check I recieved was from the OLGC (Ontario Lottery Gaming Corporation). Will they try to tax me on this?

[TorontoCFE]

Here is the difference:
The ruling in the sports case was that they were taking advantage of a flaw in the system. They did not have special knowledge that was privately held and they had no on-going expectation of profit. Any time you get something you weren't entitled to and did not expect to happen it is not taxable. Their edge came from taking advantage of systematic flaws in the game they were playing, not in their personal skill.
In poker, you have an ongoing expectation of profit (assuming you are a professional and playing a game that is normally part of your action).

In the sports case, if they spent hours each day looking for line anomalies, the ruling would be different and so far the CRA has been going after those type people looking for a favourable ruling.
Very few poker players are taxable.

[TorontoCFE]

Only if you regularly play WPT and similar events as the way you make your living and have a history of success in them.

[Twisty]

The odds on those lotteries make them unbeatable.Without knowing more details id have to say this is clearly money laundering.

[Pog0]

[ QUOTE ]
Here is the difference:
The ruling in the sports case was that they were taking advantage of a flaw in the system. They did not have special knowledge that was privately held and they had no on-going expectation of profit. Any time you get something you weren't entitled to and did not expect to happen it is not taxable. Their edge came from taking advantage of systematic flaws in the game they were playing, not in their personal skill.

In the sports case, if they spent hours each day looking for line anomalies, the ruling would be different and so far the CRA has been going after those type people looking for a favourable ruling.
Very few poker players are taxable.

[/ QUOTE ]

Very few poker players are taxable? You're saying that because most poker players do so recreationally, right?

[ QUOTE ]
In poker, you have an ongoing expectation of profit (assuming you are a professional and playing a game that is normally part of your action).


[/ QUOTE ]

I had a thought the other day: I play poker with an ongoing expectation of profit, no doubt about that. However, I receive bonuses randomly and arbitrarily. I have no expectation of these and they are the result of gambling. How strong is my case that all bonuses are windfalls?

If bonuses are considered to be part of gambling income, then I think there's a case for them being exempt from taxes (I make no deliberate attempt to get them, they just come to me at random). Rakeback would probably be a tougher sell, but perhaps not even out of the question.

Now if bonuses aren't considered to be gambling income at all, then what are they? Gifts I would imagine. Is there any way to reduce taxation on gifts from a foreign entity?

Cheers,
Pogo

[TorontoCFE]

Very few poker players are taxable because (in my opinion) poker earnings are either not significant to their overall earnings or they don't have a record of consistent winning.

I would think that if you were in the businss of poker, then bonuses would be incidental to that and taxable if your poker earnings are taxable. It is my opinion only, but I compare it to a brokerage who buys a stock for its dividend record. If they end up with an unexpected capital gain, it is still taxable. At least this is my spur of the moment view. You could argue your position, I just think it isn't as strong as the reasoning that it came about as part of a business activity.

Gifts are never taxable in the hands of the reciever no matter the source.

[skp]

http://decision.tcc-cci.gc.ca/en/200...006tcc680.html

Paragraph 48 in particular gives some clues as to how this may not apply to the poker pro:


[48] This conclusion is consistent with the case law on gambling. The appellants are not professional gamblers who assess their risks, minimize them and rely on inside information and knowledge and skill. They are not like the racehorse-owner, who has access to the trainers, the horses, the track conditions and other such insider information on which to base his wagers. Nor are they like seasoned card players or pool players who prey on unsuspecting, inexperienced opponents. Rather, they are more accurately described as compulsive gamblers, who are continually trying their luck at a game of chance.