What are your thoughts regarding taxation when poker becomes legalized and regulated?
mattmaroon
· 1 year ago
Well, I'm positive poker sites are going to have to 1099 you. You're going to have to provide your ssn as soon as you cash out more than $600 in a year I would suspect, like you do on my site (Draftmix) or any other game of skill for money site.
The rest will depend on the state you live in. I suspect a lot of professional players will either move to Nevada or at least rent an apartment there and set that up as their primary residence. I wouldn't be surprised if people sell VPN services from Nevada for that purpose as well.
Mike
· 1 year ago
Matt, I was thinking more along the lines of the sites having to pay some sort of corporate tax and consequently passing those costs off to customers via increased rake.
In my view, the main disadvantage with legalization and regulation is the likelihood that the U.S. government will see it as a money train to help pay for their fiscal irresponsibilities.
mattmaroon
· 1 year ago
Well, they will. They'll clearly pay the same corporate taxes as everyone else. But their current profit margins are in the 80% range, so I think any extra taxes will come out of that before it gets added to the rake because of the increased competition.
I think long term you'll see the same thing you saw in the automotive or pc or cell phone industries. Scores of new sites, all of which lower their margins to compete at first, and in the long run consolidations and bankruptcies eliminate all but a few.
RushStreet
· 1 year ago
I think you may be underestimating the popularity of sites owned by traditional B+M casino corporations. Once people figure out that they can use their FPPs or player reward points toward hotel comps at Harrahs properties or MGM properties, or the Venetian etc.... a great number of people will migrate away from Poker Stars and Full Tilt etc.... in fact I sometimes wonder if that is one of the things holding legislation back. It seems to me that the online lobby is mostly funded by online sites. Why would online sites want more competition? Why would they want to be taxed and regulated? They don't. All they want is for online poker to be excluded from UIEGA as a game of skill and/or they want UIEGA to be overturned. Making it easier for money to move on and offshore. This does nothing for us the players because it will still be unrgulated and will remain susceptible to scandals such as UB and AP.
I am curious what the exisiting gaming corporations think. They do not seem very active in lobying for US based licensing, taxation, and regulation - when it would seem like a homerun for them... I don;t expect any more progress until after the election as the politicians running wont touch this issue until they are safe.
mattmaroon
· 1 year ago
Yeah, I don't know. I'm not so sure the reward points will make a whole lot of difference. You'll be able to win your way into any event from any site, so there's no real edge there. A WSOP buyin costs Harrah's the same $10k it will cost Pokerstars. I guess they can effectively get the rooms for cheaper, but probably not a lot, since Stars can buy them in bulk from a competitor. People still play on Stars even though they can get 27% rakeback on Full Tilt, which adds up to way more cash than any casino comps program ever would.
I think the b&m corporations will do well online, I just don't see them overtaking Pokerstars. Stars is very good at what they do.
Online poker sites surely want it legalized. It is true that they get more market share (as a percentage) without Harrah's and MGM competing with them, but they'd have way more overall volume if poker were regulated since legalization would mean 10x the players. 20% of a market of 100 million people is far better than 50% of a market of 10 million.
Inability to process credit cards or payouts is really slowing down online poker. Just asking a customer to input their email cuts your user base down by something like a third, imagine what all of the hoops you have to jump through to play a cash game online must do. So they want to be taxed, regulated, and get competition, because at the end of the day they'll still make far more than they do now. (Profit margins will surely drop.)
All Comments
What are your thoughts regarding taxation when poker becomes legalized and regulated?
The rest will depend on the state you live in. I suspect a lot of professional players will either move to Nevada or at least rent an apartment there and set that up as their primary residence. I wouldn't be surprised if people sell VPN services from Nevada for that purpose as well.
In my view, the main disadvantage with legalization and regulation is the likelihood that the U.S. government will see it as a money train to help pay for their fiscal irresponsibilities.
I think long term you'll see the same thing you saw in the automotive or pc or cell phone industries. Scores of new sites, all of which lower their margins to compete at first, and in the long run consolidations and bankruptcies eliminate all but a few.
I am curious what the exisiting gaming corporations think. They do not seem very active in lobying for US based licensing, taxation, and regulation - when it would seem like a homerun for them... I don;t expect any more progress until after the election as the politicians running wont touch this issue until they are safe.
I think the b&m corporations will do well online, I just don't see them overtaking Pokerstars. Stars is very good at what they do.
Online poker sites surely want it legalized. It is true that they get more market share (as a percentage) without Harrah's and MGM competing with them, but they'd have way more overall volume if poker were regulated since legalization would mean 10x the players. 20% of a market of 100 million people is far better than 50% of a market of 10 million.
Inability to process credit cards or payouts is really slowing down online poker. Just asking a customer to input their email cuts your user base down by something like a third, imagine what all of the hoops you have to jump through to play a cash game online must do. So they want to be taxed, regulated, and get competition, because at the end of the day they'll still make far more than they do now. (Profit margins will surely drop.)