UKGC, Please Don’t Tax My Winnings!

peter-eastgate-winning-tournament

First they came for the gambling operators with the Place of Consumption Tax and I did not speak out – because I am not a gambling operator. Then they came for the games and software developers and required them to get a UK license and I did not speak out – because I am not a games developer. Then they came for the winnings of us, the players – and there was no one left to speak for us.

The British government has done an awful lot over the last year which has changed the face of online and mobile gambling indelibly, increasing the tax rates for operators and changing the rules of licensing. However, new consideration based on the recommendation of a new study out of the Netherlands might see the government consider going after something poker players cherish as sacred.

Would taxing winnings from online and mobile poker prove a step too far for British players?

The Study

Working in partnership with academics from the University of Nottingham and Erasmus University Rotterdam, a core team at VU University Amsterdam spent a year collecting data of 456 million player observations and built a database, which would allow them to collate and compare the observations, and draw conclusions about player behaviours.

And the conclusion? Winning at online poker (at least consistently) requires a certain element of skill. While veteran players could probably have told them this without the need for a year’s work using up untold resources, the study does give some academic credence to a long held assumption. The report demonstrated how the top performing 10% of players in the first 6 months of the study were twice as likely as the other 90% to do well in the subsequent 6 months.

The Ramifications

This study could spell bad news for British players who enjoy online poker. One of the report’s lead authors – Dr Dennie van Dolder of the University of Nottingham’s School of Economics – pointed out that the conclusions of the study could have a legal implication depending on the definition of poker as a game.

At the moment, poker is legally considered a game of chance, an assertion based on the idea that the drawing of the cards is random and that it is this which decides the outcome of the game. The winnings from games of chance, which basically includes all casino games, slots, lotteries and bingo, are untaxed, but that isn’t the case for skill games.

If poker were to be re-categorised as a skill game, it would move it into the realms of taxable income, not just for the professional players, but also for anyone having a cheeky flutter at a lunch break on their phone. As Van Dolder says “It’s up to legislators to decide whether the role of chance diminishes fast enough for poker to be considered a game of skill.”

Uh oh. While the thrill of the game is – or at least should be the most exciting and compelling element of online poker, there’s no doubt that tax free winnings have always been a huge boon. Let’s just hope a couple of things happen: a) UK legislators ignore this report, b) they decide implementation of a tax is too much of a hassle to try, and/or c) they stop being money-grabbing a-holes. Unfortunately, given recent form, it seems likely that none of these are certain.


Taxing and Regulations elsewhere on Droid Poker

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