the Styb
Rock Star
Silver Level
Regarding comments on taxing the winnings: How would you do that?
The Fed can't tax money you don't actually receive. Let's say your grandmother shuffles off this mortal coil and leaves you $100,000. you pay the taxes and put the rest in your bank account, where every month you'll accrue interest and at the end of the year you'll pay taxes on the interest.
Then one day you get a wild hair, you know where, and pull out $5K to deposit on Full Tilt. You mess around in a few small satellites and win a seat in a big tourney. Then let's say you get lucky and win $25K in that tourney. That money goes in your tilt account and you immediately use $10K to enter another big tourney, but you don't cash. (Sucker!) Do you owe taxes on the $25K you won or on the $15K you are left with?
Technically, as long as that money sits in your Tilt account, the Fed can not tax or touch it. And let's be honest here, it's not really an account. You don't actually possess the money and you don't accrue interest on it. It's just a bunch of nicely placed pixels on your screen that is the equivalent of an IOU from Full Tilt, who actually DOES possess it and actually DOES accrue interest on it at a bank outside the US, where again, they can not tax or touch it.
Essentially, one big score can last a good player quite a while. If you actually ask Full Tilt to send you some of it, the Fed can tax that portion, but they can't touch what's in your "account". You could have half a million dollars in your Tilt account but be moving ten or more times that in a year depending on wins, losses and table stakes, yet only be taxed on the small portions you cash out of your account. This is the thing that really pisses the government off.
The only viable way of working this is to tax the money held in the site operators bank, (which is going to be a cost passed straight back to us through higher rakes and lower payouts,) and have the site operator report every single deposit, transfer, cash-out and buy-in each player makes, directly to the IRS.
First, you pay taxes on the money when you get your paycheck, inheritance, whatever. Then, the site operator pays taxes on the money and its interest while it sits in their bank, and again you pay taxes on it when the site operator processes a cash-out claim from you. I don't know the actual rates we'd all be paying, but this would probably reduce every dollar we win to around fifty actual cents.
Would you be happy with this situation?
The Fed can't tax money you don't actually receive. Let's say your grandmother shuffles off this mortal coil and leaves you $100,000. you pay the taxes and put the rest in your bank account, where every month you'll accrue interest and at the end of the year you'll pay taxes on the interest.
Then one day you get a wild hair, you know where, and pull out $5K to deposit on Full Tilt. You mess around in a few small satellites and win a seat in a big tourney. Then let's say you get lucky and win $25K in that tourney. That money goes in your tilt account and you immediately use $10K to enter another big tourney, but you don't cash. (Sucker!) Do you owe taxes on the $25K you won or on the $15K you are left with?
Technically, as long as that money sits in your Tilt account, the Fed can not tax or touch it. And let's be honest here, it's not really an account. You don't actually possess the money and you don't accrue interest on it. It's just a bunch of nicely placed pixels on your screen that is the equivalent of an IOU from Full Tilt, who actually DOES possess it and actually DOES accrue interest on it at a bank outside the US, where again, they can not tax or touch it.
Essentially, one big score can last a good player quite a while. If you actually ask Full Tilt to send you some of it, the Fed can tax that portion, but they can't touch what's in your "account". You could have half a million dollars in your Tilt account but be moving ten or more times that in a year depending on wins, losses and table stakes, yet only be taxed on the small portions you cash out of your account. This is the thing that really pisses the government off.
The only viable way of working this is to tax the money held in the site operators bank, (which is going to be a cost passed straight back to us through higher rakes and lower payouts,) and have the site operator report every single deposit, transfer, cash-out and buy-in each player makes, directly to the IRS.
First, you pay taxes on the money when you get your paycheck, inheritance, whatever. Then, the site operator pays taxes on the money and its interest while it sits in their bank, and again you pay taxes on it when the site operator processes a cash-out claim from you. I don't know the actual rates we'd all be paying, but this would probably reduce every dollar we win to around fifty actual cents.
Would you be happy with this situation?
katymaty
Legend
Silver Level
Gonna need a massive ROI to break even. Best way stick to play money
Pascal-lf
Legend
Silver Level
I've been doing some reading up on the UIGEA...
The Unlawful Internet gambling Enforcement Act (UIEGA) was passed as part of the Security and Accountability For Every Pot (SAFE Port) Act. The main relevant provisions are listed on the FBI notice currently being displayed on pokerstars.com and fulltiltpoker.com:
The most important/relevant/contentious words are "illegal gambling business" and "unlawful Internet gambling". This could be the case under either federal or state law.
State law changes in each state, and is in a pretty liquid form at the moment; take Washington state as an example. Under federal law, the law which is often quoted is the Federal Wire Act of 1961. That reads as follows:
Bit wordy, but essentially (with regards to online poker) it is an offense to place a bet/wager.
A case under UIEGA and the Wire Act was brought in 2002 and ended up before the 5th US Circuit Court of Appeal. You can read the full info here if you want to go to sleep: http://www.ca5.uscourts.gov/opinions\pub\01/01-30389.cv0.wpd.pdf
In it, two online gamblers attempted to claim back their losses ($1.5k and $7.5k respectively if you are curious) under RICO from credit card companies, which is a law passed to stop racketeering - you cannot collect on illegal debts. Therefore, they had to prove that the online casinos they had played on were illegal.
The first way they tried to do this was under Kansas law:
C and E were held to be the only "remotely relevant" sections, and the court said that as the transaction had been completed before any gambling had taken place, there was no offense.
As for the Wire Act, the court judgement sums it up pretty nicely:
All of this would suggest that online poker is not illegal, and thus those charges may not succeed
However, there are possible ways for the FBI to make the charges stick. As an example, part E of the Kansas law could possibly be used against the owners of the websites. What we could see in the future though, if an appeals court does rule that online poker is not classed as an "illegal gambling business", is the proliferation of online poker from international sites back into America - apart from in sites where it is specifically made illegal.
The Unlawful Internet gambling Enforcement Act (UIEGA) was passed as part of the Security and Accountability For Every Pot (SAFE Port) Act. The main relevant provisions are listed on the FBI notice currently being displayed on pokerstars.com and fulltiltpoker.com:
The most important/relevant/contentious words are "illegal gambling business" and "unlawful Internet gambling". This could be the case under either federal or state law.
State law changes in each state, and is in a pretty liquid form at the moment; take Washington state as an example. Under federal law, the law which is often quoted is the Federal Wire Act of 1961. That reads as follows:
Bit wordy, but essentially (with regards to online poker) it is an offense to place a bet/wager.
A case under UIEGA and the Wire Act was brought in 2002 and ended up before the 5th US Circuit Court of Appeal. You can read the full info here if you want to go to sleep: http://www.ca5.uscourts.gov/opinions\pub\01/01-30389.cv0.wpd.pdf
In it, two online gamblers attempted to claim back their losses ($1.5k and $7.5k respectively if you are curious) under RICO from credit card companies, which is a law passed to stop racketeering - you cannot collect on illegal debts. Therefore, they had to prove that the online casinos they had played on were illegal.
The first way they tried to do this was under Kansas law:
C and E were held to be the only "remotely relevant" sections, and the court said that as the transaction had been completed before any gambling had taken place, there was no offense.
As for the Wire Act, the court judgement sums it up pretty nicely:
All of this would suggest that online poker is not illegal, and thus those charges may not succeed
However, there are possible ways for the FBI to make the charges stick. As an example, part E of the Kansas law could possibly be used against the owners of the websites. What we could see in the future though, if an appeals court does rule that online poker is not classed as an "illegal gambling business", is the proliferation of online poker from international sites back into America - apart from in sites where it is specifically made illegal.
the Styb
Rock Star
Silver Level
PLEASE tell me that means we could block the fricking Russians and Brasilians!!! PLEASE!!!
On a related note, I read a post somewhere here, (damned if i can find it now,) that online poker was ruled legal in Florida, (or at least one area of Florida,) because online track betting was legal there and the local track had a poker room.
Hordling
Rock Star
Silver Level
But my pixels were oh so lovely... how I miss those pixels.
-----
Got my official response from FTP today:
[FONT="Arial","sans-serif"]Dear Hordling,
Unfortunately, due to recent actions by the U.S. government, Full Tilt Poker iscurrently unable to facilitate 'real money' play, deposits or withdrawals byplayers based in the United States.
Please rest assured that player accounts remain safe and secure and ourtechnical and legal teams are working to have your money returned to you assoon as possible.
We sincerely apologise for any inconvenience caused and will keep you up todate with additional information as it becomes available.
Thank you for your understanding,
Full Tilt Poker [/FONT]
Hey, they care about my understanding.
ZeusCayman
Rising Star
Bronze Level
I'm not sure what your point is here. They aren't going to go that far and change the rules so that they can tax you before you even cash-out. They can only tax you one what you have and considering it's not real money until it hits our bank account, thats all they will ever be able to tax, which should be around 30% depending on how much you made that year.
ZeusCayman
Rising Star
Bronze Level
Okay, but if they take the taxes out right then, you shouldn't be required to pay taxes on your winnings when you cash out. Surely they wouldn't tax you twice...
lilybo
Legend
Silver Level
Dear Ms. Boyea:
Thank you for informing me of your support for legalizing financial transactions through internet gambling websites. Your thoughts on this important matter are most welcome and appreciated.
As you know, Internet gambling is a 24-hour a day activity, which oftentimes undercuts a player's perception of the value of cash leading to addiction, severe debt, and illegal activity. And, because age verification is difficult to measure online, Internet gambling creates a major risk for minors who may not understand the seriousness behind the transfer of electronic funds. Still, Internet gambling is more than a social problem; it is a national security concern as well. According to the Department of Justice, Internet gambling not only damages communities, but also is used to launder money. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) under title VIII of the SAFE Port Act (P.L. 109-347), which prohibits gambling businesses from accepting checks, credit cards charges, electronic transfers, and similar payments in connection with illegal Internet gambling.
Thus, On March 17, 2011, Representative John Campbell (CA) introduced H.R. 1174, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. If enacted, this legislation would allow the Director of the Financial Crimes Enforcement Network (FINCEN) to adopt a framework for legal internet gambling. Specifically, FINCEN would be authorized to license online gambling sites annually and require the sites to use age identification technologies and pay the appropriate licensing fees, which would cover the cost of monitoring online gambling sites. Importantly, online gambling sites which are not licensed by FINCEN would be considered illegal and would be subject to the penalties incurred by the Internet Gambling Prohibition Enforcement Act. Presently, this legislation awaits action in the House Financial Services, House Judiciary, and House Energy and Commerce Committees.
Rest assured, your thoughts on this important issue will be remembered during the 112th Congress. Again, thank you for contacting me; and for all you do for our community and our country. Should you have any further comments or questions on this or any other issue, please contact me at my office in Livonia, Milford, or Washington, D.C.
I work for you.
Sincerely,
Thaddeus G. McCotter
Member of Congress
Dear Lisa,
Thank you for contacting me about online poker. I understand your concerns.
As you may know, Senator Robert Menendez has introduced legislation in the past that would make skill games including poker, mah-jongg, bridge, and chess exempt from the Unlawful Internet Gambling Enforcement Act (UIGEA) passed in 2006. As legislation comes before me for a vote, I will keep your views in mind.
Thank you for contacting me. Please continue to keep me informed about issues of concern to you and your family.
Sincerely,
Debbie Stabenow
United States Senator
DS:as
Thank you for informing me of your support for legalizing financial transactions through internet gambling websites. Your thoughts on this important matter are most welcome and appreciated.
As you know, Internet gambling is a 24-hour a day activity, which oftentimes undercuts a player's perception of the value of cash leading to addiction, severe debt, and illegal activity. And, because age verification is difficult to measure online, Internet gambling creates a major risk for minors who may not understand the seriousness behind the transfer of electronic funds. Still, Internet gambling is more than a social problem; it is a national security concern as well. According to the Department of Justice, Internet gambling not only damages communities, but also is used to launder money. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) under title VIII of the SAFE Port Act (P.L. 109-347), which prohibits gambling businesses from accepting checks, credit cards charges, electronic transfers, and similar payments in connection with illegal Internet gambling.
Thus, On March 17, 2011, Representative John Campbell (CA) introduced H.R. 1174, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. If enacted, this legislation would allow the Director of the Financial Crimes Enforcement Network (FINCEN) to adopt a framework for legal internet gambling. Specifically, FINCEN would be authorized to license online gambling sites annually and require the sites to use age identification technologies and pay the appropriate licensing fees, which would cover the cost of monitoring online gambling sites. Importantly, online gambling sites which are not licensed by FINCEN would be considered illegal and would be subject to the penalties incurred by the Internet Gambling Prohibition Enforcement Act. Presently, this legislation awaits action in the House Financial Services, House Judiciary, and House Energy and Commerce Committees.
Rest assured, your thoughts on this important issue will be remembered during the 112th Congress. Again, thank you for contacting me; and for all you do for our community and our country. Should you have any further comments or questions on this or any other issue, please contact me at my office in Livonia, Milford, or Washington, D.C.
I work for you.
Sincerely,
Thaddeus G. McCotter
Member of Congress
Dear Lisa,
Thank you for contacting me about online poker. I understand your concerns.
As you may know, Senator Robert Menendez has introduced legislation in the past that would make skill games including poker, mah-jongg, bridge, and chess exempt from the Unlawful Internet Gambling Enforcement Act (UIGEA) passed in 2006. As legislation comes before me for a vote, I will keep your views in mind.
Thank you for contacting me. Please continue to keep me informed about issues of concern to you and your family.
Sincerely,
Debbie Stabenow
United States Senator
DS:as
the Styb
Rock Star
Silver Level
Well, we HOPE they don't change the rules like that, but we hoped they wouldn't change the rules about payment processing too!
In New Orleans, the politicians recently tried to enact a tax on "unsold artworks" attempting to tax locals on unsold paintings, photographs and other media. It failed miserably due to public backlash, angry denouncements from gallery owners who have hundreds of unsold works and the fact that they suddenly realized they would have to figure out a way to tax musicians for songs which had not been recorded or sold.
If I open a widget store, I pay a sales tax on my materials, a tax on my earnings from wholesale sales to stores, who in turn charge the end user another sales tax and are also charged a tax on their sales earnings. Your right… they wouldn't tax us twice. They'd do it four times!
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Pascal-lf
Legend
Silver Level
1. I was talking to someone earlier who just returned from Vegas where he played tournaments at 11am, 3pm and 7pm. Circus Casinos alone has 4 24/7 casinos in Vegas where you can play blackjack/roulette/slots at any time. What's the difference?
2. You can smoke or drink at any time. Cigarette machines are available to buy cigarettes at any time of the day. The health problems, and cost to the state, associated with many other activities are far worse than poker, and they are still legal.
Additionally, poker is a skill game which can be played for money or not for money? Why is playing chess for money online not illegal? Because it's a game of skill. As is poker.
It's not difficult to measure online. Just say that you must provide a scan of your passport before playing online, and make it an offense to allow someone else to use your passport to gamble online. Similar to smoking, or alcohol, etc.
I don't agree that it is a social problem in anyway, and so many things can be used for money laundering. The quoted article is irrelevant, essentially - illegal Internet gambling doesn't cover anything apart from sports betting according to the Wire Act 1961. How is this proof of laundering money? And the charges being brought against the 3 major sites currently are not proof; that is simply a term being used to bring charges against sites which attempted to bypass the current interpretation of the law and in turn did something illegal - the fact that poker is considered illegal given the DoJ's interpretation of the Wire Act has led to deposits/withdrawls being framed under the title of money laundering.
The point which you say is "important" is exceptionally so - this legislation could be used to limit choice for the consumer and allow for high taxation levels of a legitimate hobby of hundreds of thousands of American players. One of the attractions of online poker is the fact that players can communicate with and challenge players from around the world; current protectionist legislation which has already been passed by certain states prevents this for reasons of pure greed.
If you want to use any of these points in a reply email, feel free
ZeusCayman
Rising Star
Bronze Level
Thats rediculous, which is why it failed.
If I open a widget store, I pay a sales tax on my materials, a tax on my earnings from wholesale sales to stores, who in turn charge the end user another sales tax and are also charged a tax on their sales earnings. Your right… they wouldn't tax us twice. They'd do it four times!
Taxes are emposed when money is changing hands, hince why placing taxes on a unsold artwork is a rediculous idea. In your example, money changes hands several times. In poker, money changes hands once. If they chose to charge me tax for every pot, then they are telling me that I am receiving money right then and that it is now mine. If they chose to tax me after I cash out my winnings then the government is telling me that the money isn't really mine until I cash it out and thats why I'm being taxed.
I'm not saying it isn't possible, I'm just saying it doesn't make sense.
Charade You Are
you can call me Frost
Silver Level
More holes in this response than a chain link fence. I don't think I can even list ALL of the "legal" gambling that is allowed in this country. Guess they had their boilerplate responses ready ahead of time. Wish they gave us a heads up so we could have withdrawn our funds.
I'm still waiting for my replies.
TheKAAHK
Bubble Punter
Loyaler
Ding ding! We have a winner!
Change the laws, make the legal and right illegal and wrong, then justifiably take what you want. Ah, don't you all just love capitalism?
Pascal-lf
Legend
Silver Level
Grover Cleaveland:
"When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government, such exaction becomes ruthless extortion and a violation of the fundamental principles of a free government."
"When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government, such exaction becomes ruthless extortion and a violation of the fundamental principles of a free government."
the Styb
Rock Star
Silver Level
Then why do i pay property taxes on my land and home every year even though they were paid for free and clear in 2006?
That, sir, is my point exactly!
Wes747
Visionary
Silver Level
If I open a widget store, I pay a sales tax on my materials, a tax on my earnings from wholesale sales to stores, who in turn charge the end user another sales tax and are also charged a tax on their sales earnings. Your right… they wouldn't tax us twice. They'd do it four times!
Not to be nitpicky and i'm not on the government's side (i'm dying on the inside at my inability to play poker), but if you wouldn't pay tax on the materials you buy to make your widgets. I work in Accounting at a Manufacturing company....we don't pay sales tax on anything we buy provided that we sell it to someone else. As long as the end user is taxed we are exempt.
I guess how that would relate to poker is that it wouldn't matter how many transactions you make or what you do with your money on the Full Tilt site, you wouldn't pay taxes. The only time you would pay taxes would be on whatever money you withdraw. You probably wouldn't pay tax at the time of the withdrawal, because you will be able to offset your gains by any losses that you have incurred. How you will be able to prove your losses is another story entirely...
Maybe the poker companies will have to provide us with 1040's? lol
TheKAAHK
Bubble Punter
Loyaler
I would guess that if there were a taxation system set up, it would probably have to be paid on withdraws. Gotta remember that it is your government that is enacting these laws, and the rest of the world should not have to suffer for that bullshit.
Meaning that if there was only one American player at the table, and everyone else was from elsewhere, it would be virtually impossible to tax the pot of the American and not tax the other nationalities.
S93
Legend
Silver Level
It will never be one or the other. It will be rake or both.
Pascal-lf
Legend
Silver Level
I mean tax via rake as well as the money that goes to the poker site, not just rake itself.
