While the Main Event again this year produced 9 new millionaires, such amounts never go unnoticed by the IRS. Each year, the fiscal expert Russ Fox addresses the situation of everyone of these 9 winners, as well as of the amount sent to the Treasury Department. Needless to say, again this year the IRS is the clear winner!
Of course, we don’t know the exact situation of each player towards staking or swapping parts of their action. Poker players seldom keep 100% of their action in a tournament and, as the government states, it is the duty of the recipient of money to take care of his fiscal obligations. To get a better idea of these taxes in swapping/staking situations in a poker tournament, refer to this article.
However, since these deals are not public, we will assume that each player had 100% of his action.
Champion: Scott Blumstein- USA- $8 150 000
Scott considers himself a professional player so he has to pay his taxes like any other self-employed worker. He can deduct his travel expenses and also deduct his eligible gambling losses for fiscal year 2017 from his winnings. Ultimately however, he will pay a total of 47.11% to the federal government and to the state of New Jersey where he lives. Before deductions, this represents $3 839 429.
2nd : Dan Ott- USA-$4 700 000
Ott’s situation is quite similar to Blumstein’s. The only difference is that he resides in Pennsylvania, where the state tax is lower, as he only pays 3.07%. Add to this a second state tax called the Earned Income Tax with a rate of 1.60% Mister Ott thus will return 44.68% of his winnings, a tidy $2 099 806.
3rd: Benjamin Pollack- Great Britain/France- $3 500 000
Benjamin Pollack is originally from France but, as a pro poker player, he decided to move to London. Why? Simply because poker winnings are not taxable in Great Britain. As a EU resident he was allowed that move. Thus he keeps the whole $3 500 000 he won and does not pay a penny on it!
4th: John Hesp- Great Britain- $2 600 000
The 63 years old amateur not only had the adventure of his dreams the last few weeks, he will have done it without paying a penny in taxes! Great Britain is one of the countries with a tax treaty with the United States that prevents them from being taxed in the USA. Then back home, since Great Britain considers poker as essentially a game of chance, he will not pay in his country either.
5th: Antoine Saout- Great Britain/France- $2 000 000
As a professional poker player, Antoine used the same relocation tactic as Benjamin Pollack. This way he also saves himself from taxes in both the USA and Great Britain.
It is noteworthy that for both players, should they have decided to stay in France, they would not have been taxed in the United States because France has a tax treaty with the USA exempting their citizens from paying gambling taxes in the USA. However, coming back to France, the taxman would then have taxed them for 48% of their winning!
6th: Bryan Piccioli- USA- $1 675 000
If being an American pro poker player is costly, living in California is even worse! Piccioli got the highest rate of taxation on this final table, having to pay $489 328 to the IRS plus $201 695 to the state of California. His total tax of $791 023 represents 47.23% of his winning. He gets less than one million dollars to keep. While he finished 6th, he only got the 8th biggest net amount.
7th: Damian Salas- Argentina- $1 425 000
Argentina is one of very few countries without a fiscal treaty with the USA. Hence, even though his winnings are not taxable in his country, he still left Las Vegas with 30% gone from his paycheck. He leaves $427 500 behind with no way of getting any of it back, winning a bit less than one million dollars.
8th: Jack Sinclair- Great Britain- $1 200 000
Sinclair benefits from the same privilege as Pollack, Hesp and Saout. As a resident of Great Britain he gets to keep his whole winnings. While finishing 8th, he comes out 6th on the net money list.
9th: Ben Lamb-USA- $1 000 000
Being a professional poker player, Lamb must pay an estimated $408 483 to the IRS, 40.85% of his winnings. His only break is that Nevada where he lives has no State tax.
Ultimately, only from the players at the final table, $6 390 860 will find their way to the IRS and $1 175 381 to different states. Remarkably, no other country represented will get a single dollar from their players, a rare feat! From these players, a combined 28.82% was withheld, a lot less than the 39.73% collected in 2016.
What if a Canadian had won?
Had a Canadian qualified for the final table, he would have been in a similar position to that of Damian Salas, seeing 30% of his gain withheld by the IRS. This money would have been withheld before he would have received his 70%.
However, contrary to Argentina, Canada does have a tax treaty with the United States. The IRS still withholds 30% but the treaty says Canadians will be treated the same way as Americans. In other words, once the year is over, a Canadian citizen can file and retrieve his taxes, either completely or in part. Here is the logic behind the refund of gambling taxes for Canadians.
What about income taxes here in Canada? Gambling winnings are not taxable in Canada, so if you are a recreational player you will not have to pay taxes in Canada. However, if playing poker is your way of making a living, the CRA might want to consider you as a professional and tax you on them, as a self-employed worker. This is still a grey area of the tax code, particularly in Québec and at the federal level. Case law so far is on the players’ side but the future is still uncertain as many players are under revision currently.
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