2a. Re: XVP: 60 Minutes online poker story
Date: Tue Dec 2, 2008 8:38 am ((PST))
...
As far as I can see, the Democrats are in power now and they have seemed to be
in favor of acknowledging and taxing on-line gaming (with the express
prohibition of sports betting). The only issue will be how it will be taxed.
Once again there are two main schools of thought here. Do we tax the individual
player? Or, the site operator? If we stay as close to the brick and mortar
model, we would tax the profits of the operator--that's where the real money is.
Most individual players would either not win or win not much. Trying to get a
$100 from fifty million people is costly and not effective. But, getting 6%
gaming tax and 38% income tax from a handful of licensed operators would be
quite easy."
The business is currently the one escaping US tax liability; American citizens are already obliged to pay taxes on winnings online, just like any other gambling activity. Regulation would provide a means of assuring compliance, if reporting by the business to IRS of gambling results is required as a part of it -- although they will also need a way to ascertain who is a US citizen and to get their SS#.
Once the identifying information is obtained, since EVERYTHING is (obviously) computerized, it would not be an unreasonable burden on the business to ask them to report ALL wins and losses, to provide a really accurate accounting of each player's results, rather than go with $1200 threshholds for W2Gs and/or 1099's and have no reliable documentation of the "loss" end of the equation. This would simplify record-keeping for players (I find online play the most challenging and time-consuming to keep records of) and would not hurt most players, since most players don't have net wins -- unless "session" is defined in such a way as to assure that no one at all can win, in which case even a successful player might have to give it up, or take up non-US citizenship!
It will be interesting to see, if the business is taxed, whether they will pass that expense on to players in additional "rake" and surcharge on tournaments, or will pay the taxes out of their profits in order to remain competitive with other sites - like three gas stations on the same corner, the charges will likely move in tandem most of the time.
The regulation MIGHT be nice - it might result in some REAL penalties for any cheating activities such as occurred in the instance(s) covered in the 60 Minutes segment. Or, we might find that internet gambling / poker is above the comprehension of the regulators and that they are unable to monitor for such abuses - but there certainly could be requirements for cooperation with investigations, etc., when such activities occur. Of course, if the cheats are not US citizens and never enter the US, they may be able to escape prosecution.
IF the industry is legalized, regulated, and taxed, it will create a wide array of interesting questions to be answered; hopefully the player will not suffer (other than those that are currently dodging their tax obligations).
--BG
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