Be Careful What You Wish For

doormat · #1 10-07-2006, 01:29 PM

We have witnessed the Golden Age of poker, and it has all taken place despite the Justice Department's view that the game is illegal and always has been. Before demanding a "carve out" for poker, perhaps it would be wise to wait and see what the current situation brings.

I see some downsides to demanding a carve out. One obvious downside is that congressional voting demonstrates that there is very little enthusiasm for legalizing any form of internet gambling, so it is unlikely to happen. What could happen if congress is forced to make another decision, is that they could actually pass laws that have some teeth, such as forcing ISP's to deny access. Poker players are likely to be out-lobbied by the more powerful religious lobbies should it become a big enough issue that congress is forced to deal with it again. The current law is not good, but it could be a lot worse.

But what if a miracle happens and poker becomes legal and regulated? The first thing they will do is tax it, and the next thing they will do is make sure you have to play their game, not a more favorable offshore game. Because they will want to collect their new tax.

The new tax will likely be an excise tax such as the ones levied on horse racing. The average racetrack pays a 2 percent tax on every dollar bet - not a tax on profits (though they may also pay an additional tax on profits). If congress or states instituted a similar structure for poker it could be disastrous. Take a 10-20 game with a 5 percent rake, max 2 dollars. If there is 80 dollars in the pot and that is taxed at 2 percent, the site is making only 40 cents instead of two dollars on that pot. A little tax can go a long way towards killing the goose, and rakes could skyrocket to make up for it.

Could this happen? You bet. If internet poker is "legalized" you can be assured that government will be less interested in you being able to make a profit than in collecting revenue from it. The house rake in lotteries is about 50 percent, and on top of that you are taxed on winnings.

It may well be that the best outcome is for internet poker to remain "illegal" but weakly enforced. It has worked well for sportsbooks - they have been clearly illegal for a long time, with tremendous growth. The law just passed is not a strong one, and it may fade into the sunset with weak enforcement.

Having said all this, there is no harm in expressing displeasure to your congressman.

MrBrightside · #2 10-07-2006, 01:44 PM

Umm, you do know you have to pay taxes on your winnings now, right? It amazes me how people simply talk about cheating on their taxes like it is no big deal, then go off like a holy roller on ZeeJustin for running multiple accounts.

No offense guys, but if you are the one of many who haven't paid taxes on your winnings, you're part of the reason this happened.

Chesters Dad · #3 10-07-2006, 01:55 PM

I think he is talking about the sites being taxed, not the players, which would result in much higher rakes for the sites to make $$$. So the point seems to be regardless of wherether or not an individual reports their income, it still would make poker more expensive.

Not sure if I agree that it's best to not seek a carve-out, but I do think that these issues are important to think about. But driving poker underground seems a worse alternative in some ways than risking seeking the carve-out

ZPinhead · #4 10-07-2006, 01:57 PM

[ QUOTE ]
Umm, you do know you have to pay taxes on your winnings now, right? It amazes me how people simply talk about cheating on their taxes like it is no big deal, then go off like a holy roller on ZeeJustin for running multiple accounts.

No offense guys, but if you are the one of many who haven't paid taxes on your winnings, you're part of the reason this happened.

[/ QUOTE ]

Hey bonehead, the OP was in no way talking about income taxes, he was talking about potential excise taxes on legalized online US poker sites and it affect on rake. The government's gotta make sure that they get you coming and going! Also what do gambler/IRS avoiders have to do with the current legislation? I'll tell you; nothing.

doormat · #5 10-07-2006, 02:00 PM

Brightside,
It amazes me how useful a reading comprehension course could be to some people. Nowhere do I advocate not paying your taxes, and I do pay mine.

MrBrightside · #6 10-07-2006, 02:08 PM

I apologize, but I regularly have people express astonishment that I pay my taxes. I assure you my reading comprehension is very good.
[ QUOTE ]
The house rake in lotteries is about 50 percent, and on top of that you are taxed on winnings.

[/ QUOTE ]

I guess, this implies poker (the subject of you post) is NOT taxed on winnings, or else, what is the point of writing it?

Also, try a little reading comprehension yourself. I wrote "IF" you are one of those who haven't paid your taxes....

I think the central point is indisputable.. one of the motivations behind this law is people not reporting income, even if they won't come out and say it.

doormat · #7 10-07-2006, 02:16 PM

The point of writing it is to demonstrate that government has absolutely no problem taxing things to the point where no one can win. I hope I don't have to explain every sentence to you, but I will try to be patient.

BTW, if your regular crowd is astonished that you pay taxes, it might be time to look for new friends.

bball904 · #8 10-07-2006, 02:20 PM

doormat, excellent post. I agree with you completely. I think it's unfortunate that the majority of posts in this forum are not constructive like yours.

cartman · #9 10-07-2006, 03:23 PM

This reminds me of the blackjack situation in New Jersey. Ken Uston filed and won a suit which eventually reached the New Jersey Supreme Court. The court ruled that New Jersey casinos could not bar skilled blackjack players from playing. Immediately they made the games so bad that no skilled player would even want to play and they have essentially remained that way ever since. Nevada, whose casinos still have the right to bar skilled players has offered countless profitable games.

NapoleonDolemite · #10 10-07-2006, 04:42 PM

[ QUOTE ]
We have witnessed the Golden Age of poker, and it has all taken place despite the Justice Department's view that the game is illegal and always has been. Before demanding a "carve out" for poker, perhaps it would be wise to wait and see what the current situation brings.

I see some downsides to demanding a carve out. One obvious downside is that congressional voting demonstrates that there is very little enthusiasm for legalizing any form of internet gambling, so it is unlikely to happen. What could happen if congress is forced to make another decision, is that they could actually pass laws that have some teeth, such as forcing ISP's to deny access. Poker players are likely to be out-lobbied by the more powerful religious lobbies should it become a big enough issue that congress is forced to deal with it again. The current law is not good, but it could be a lot worse.

But what if a miracle happens and poker becomes legal and regulated? The first thing they will do is tax it, and the next thing they will do is make sure you have to play their game, not a more favorable offshore game. Because they will want to collect their new tax.

The new tax will likely be an excise tax such as the ones levied on horse racing. The average racetrack pays a 2 percent tax on every dollar bet - not a tax on profits (though they may also pay an additional tax on profits). If congress or states instituted a similar structure for poker it could be disastrous. Take a 10-20 game with a 5 percent rake, max 2 dollars. If there is 80 dollars in the pot and that is taxed at 2 percent, the site is making only 40 cents instead of two dollars on that pot. A little tax can go a long way towards killing the goose, and rakes could skyrocket to make up for it.

Could this happen? You bet. If internet poker is "legalized" you can be assured that government will be less interested in you being able to make a profit than in collecting revenue from it. The house rake in lotteries is about 50 percent, and on top of that you are taxed on winnings.

It may well be that the best outcome is for internet poker to remain "illegal" but weakly enforced. It has worked well for sportsbooks - they have been clearly illegal for a long time, with tremendous growth. The law just passed is not a strong one, and it may fade into the sunset with weak enforcement.

Having said all this, there is no harm in expressing displeasure to your congressman.

[/ QUOTE ]

I think you're exactly right. It's better for us if the government keeps its grubby hands out of the online gaming business and sticks to what it does best, wasting money and restricting our freedoms.