Online poker in the UK to face reform

[redarmi]

"The govt wont change the taxation of gambling for the punter as more lose than win - so there is more losers than winners so no point taxing winners as more people would come foward as losers and make it a net losing position for the inland revenue."

Correct - that is why at present betting duty effectively taxes punters' losses.  The Revenue know which way round they want to be.

Never really understood why people think this precludes them from taxing winners.  The US IRS manage to do it very effectively.

[DaveShoelace]

The majority of the stuff coming from the Culture secretaries office has been much more about not letting operators not on the UK white list to advertise in this country without paying a premium, not much about actually taxing punters or existing white listed operators. It will probably come up too, I think ultimately that's the way this is headed, but right now its much more about regulating overseas operators and the advertising.

Not sure I quite understand this. Companies not on the white list can't advertise in the UK, that's the whole point of the white list isn't it? Or have I misunderstood what you're trying to say.

Personally I think as someone noted above the main impetus for this was France and Italy making the UK look a bit daft and outdated in their approach to regulation. Nobody of any significance has even applied for a UK licence. Why bother when it gives you no advantage? So of course they are miising out on a load of lovely tax revenue. Mmmmm tax.

Sorry I was a bit sleepy eyed this morning I, I wrote advertise when I meant operate. My understanding is that they want to charge operators not on the white list, possibly through the payment processors, for having UK custom. They also want to have a hand in regulating those currently on the white list, as they currently allow them to advertise while having no influence on how they are regulated.

This was all pre black friday, however, I can only assume that their line will be much tougher now.

[kinboshi]

Is the tax in UK prohibitively high for the online poker rooms to operate from here?  Bit of a missed opportunity for the government and the country if that's the case.  Should be trying to get them to base themselves in the UK and generate some revenue for the public coffers.

[DungBeetle]

"The US IRS manage to do it very effectively."

The IRS are almost exclusively interested in generating revenue, sometimes to the expense of industry.  The Revenue take a longer term view and don't generally want to tax industries out of existence.  If they tax the losses (gambling duty) AND tax the wins (income tax) then it gets to a point where the turnover lost from the industry will outweight the tax collected.  I sometimes wonder if the US have ever heard of the Laffer Curve.

This is before we get into the administrative nightmare of tax relief for punters losses.  Can you carry forward/back to other years?  How do you prove your losses.  How do you account for "live" wins/losses which are not subject to a digital record.

It's an almighty can of worms, and the Revenue won't touch it imo.  
 
 
 

[redarmi]

Sorry I was a bit sleepy eyed this morning I, I wrote advertise when I meant operate. My understanding is that they want to charge operators not on the white list, possibly through the payment processors, for having UK custom. They also want to have a hand in regulating those currently on the white list, as they currently allow them to advertise while having no influence on how they are regulated.

This was all pre black friday, however, I can only assume that their line will be much tougher now.
[/quote]

They already have a hand in the regulation in that they don't allow juridictions onto the white list unless they meet their criteria.  I was involved in the process of getting Antigua onto the white list and it isn't an easy process.  Operators don't get onto the white list - that is for jurisdictions only afaik.

[Ant040689]

"The US IRS manage to do it very effectively."

The IRS are almost exclusively interested in generating revenue, sometimes to the expense of industry.  The Revenue take a longer term view and don't generally want to tax industries out of existence.  If they tax the losses (gambling duty) AND tax the wins (income tax) then it gets to a point where the turnover lost from the industry will outweight the tax collected.  I sometimes wonder if the US have ever heard of the Laffer Curve.

This is before we get into the administrative nightmare of tax relief for punters losses.  Can you carry forward/back to other years?  How do you prove your losses.  How do you account for "live" wins/losses which are not subject to a digital record.

It's an almighty can of worms, and the Revenue won't touch it imo.  
 
 
 

This.

Unless poker is perhaps seperated from every other form of gambling and there is an effective way of tracking player wins. They could have it by the end of the year if you have cumulatively made a profit of over 15k online over all the sites they govern for your profile for  the year you owe a certain amount. No chance really to tax live winnings. Even with the formula I suggest would be tough to monitor and again if you lose the second year could reclaim losses?

[DungBeetle]

Ha - just checked on the IRS site and they don't allow carry forward of gambling losses.

So you could absolutely do your pods on roulette one year and lose 100k, but then if you happen to have a good night the following year and claw back 10k the IRS want a piece of the action!

Why does any American citizen gamble?  You have the beat the house edge, and give up a load to the taxman.  Unbelievable.

[AlunB]

Is the tax in UK prohibitively high for the online poker rooms to operate from here?  Bit of a missed opportunity for the government and the country if that's the case.  Should be trying to get them to base themselves in the UK and generate some revenue for the public coffers.

Short answer yes. It's not that's it's 'prohibitively high' it's just that compared with the near zero tax rates offshore it's just a non starter. Even Ladbrokes has been moving operations offshore to save money.

Just to add to this, France and Italy on the other hand said if you don't base some operations here and pay tax to us directly then you can't have an official site. That said we're already seeing in France that some people are just not bothering with a .fr site and taking french punters on a dot com site. And the tax rate there is so daft that nobody is making any money so let's hope they don't follow that model.

[doubleup]

Why does any American citizen gamble?  You have the beat the house edge, and give up a load to the taxman.  Unbelievable.

It just comes down to the definitions in their tax laws.  In the uk, income tax is only due on earnings from a trade profession or vocation and legal cases have defined that card playing is not covered.  To tax gambling as income a completely new type of tax would have to be created.  

Also when wondering why Americans gamble, you should remember that in uk casinos the rake is subject to betting duty at up to 50%, if that happened online it would be gg winning.

 

[redarmi]

It doesn't really work that way in the States.  You are only ever going to have your details collected by the IRS if you win over a certain amount (normally $500 for a poker tourney, $10k cash winnings/chip redemption) and even then you can offset losses but you have to be able to present some kind of proof of your losses.  My local office will accept a hand written journal recording wins and losses and casino ATM receipts as proof of losses.  I also know of a few people that go to the local racetrack and pick up a load of losing racing tickets around tax time.  It does rely massively on you being honest. Obviously if you have a massive bink then you are looking at some level of payment but I have never really understood why professional gamblers think they should be exempt from contributing to society by paying taxes anyway.  The Uk is the only country that does it this way as far as I can see.

[boldie]

I have never really understood why professional gamblers think they should be exempt from contributing to society by paying taxes anyway. 

Very much this.

[DungBeetle]

"I also know of a few people that go to the local racetrack and pick up a load of losing racing tickets around tax time.  It does rely massively on you being honest."

Now you are alluding that whilst IRS collects tax, it doesn't do it effectively.  This is the reason why HMRC doesn't bother to pursue this angle I'd imagine.

[DungBeetle]

But agree with you that pro gamblers should pay tax.  However, administrating this is very difficult.

[redarmi]

"I also know of a few people that go to the local racetrack and pick up a load of losing racing tickets around tax time.  It does rely massively on you being honest."

Now you are alluding that whilst IRS collects tax, it doesn't do it effectively.  This is the reason why HMRC doesn't bother to pursue this angle I'd imagine.

My guess would be that the number of people that overpay is at least equal to those that get away with things like this.  I only really know poker players and sport bettors that do this for a living but I doubt that some old lady that has a big win on the slots bothers to get any evidence of her losses when she maybe puts $20 once a week.  As in almost all industries it is the little people and uneducated that get screwed.  The States very much revolves around money.  The crack dealers are more scared of the IRS than the police!!!!

[AlunB]

But agree with you that pro gamblers should pay tax.  However, administrating this is very difficult.

People often say this, but reintroducing 'betting tax' for sports punters and introducing, for example, a withdrawl 'tax' for poker and even casino players would be pretty simple to do.

It wouldn't be the same as income tax, obviously, but it would be something.