The Taxing Side of Poker - Can You Keep Your Winnings?
Cards on the table - the most thrilling part of poker is playing your hand and discovering if that rake of chips nestled in the middle of the table is coming home with you. Still, even when you bring home the pot, are you bringing home the ENTIRE pot? Or does the government want a piece of the pie?
A beginner’s introduction to poker typically involves a friendly at-home game devoid of any form of cash. Yet, as a player’s game sharpens, it’s common to add in the odd flutter - just to keep things interesting. The time may come when a player wants to take their talent to a table with real money in the hopes of hitting it big. Yet, real-money tables (and the potential winnings that come with them) are more complex than a friendly at-home game.
A Worldly Approach
Gambling laws and tax regulations are a tricky business but the first element to consider is where in the world you’re playing. Not only are there varying regulations on gambling in different countries, from one location to the next, but the onus for tax on gambling games can also shift from player to bookie or casino operator. What’s more, while several countries can place the responsibility for paying tax on the player, the amount of tax on these winning ranges from very low to exceptionally high. Throughout the below text we’ll clearly outline which countries provide the most competitive tax environment for poker players and avid gamblers.
In-Person vs Online
Another important factor to consider when looking a taxes for poker winnings is whether you’ll be gambling in a brick and mortar casino or an online one. Again, location comes into play here. If you’re based in the UK, Europe, Oceania and Canada, then no, you likely will not have to pay any tax on your online gambling winnings. However, if you’re playing online in the US, it’s required by law that a player declares gambling winnings on their tax return each year. Still, there are several countries that have no online gambling tax passed on to players. These include the home of KamaGames’ headquarters, Ireland. Also on the list are Sweden, Italy, the UK, Germany, Canada, Austria, Bulgaria Belgium, Malta, and Denmark.
Music to any poker lover’s ears…in some gambling hot spots around the globe, there may be no tax on gambling at all! What’s more, in many cases where there is a tax it’s not for the players themselves. Instead, this cost is passed onto the casino operators and bookies who arrange these games. In these instances, the exact cost varies wildly with every region. In some, they pay a fixed amount every year, while in others operators pay a percentage of their total gross income.
Below we’ve outlined a complete list of countries where happy poker players can play, win and take home the whole pot.
Where Are Poker Winnings Taxable?
Unfortunately, there are several regions where the government will take a healthy chunk of a player’s winnings. For most of Europe, the general idea is that as a recreational hobby, poker isn’t taxable but as a profession, it COULD potentially be. As this wording suggests, there’s a hefty amount of grey area here. In general, taxation laws (on the player end) around poker aren’t heavily enforced in Europe. That said, a player should take care to look into their tax requirements in more detail before delving into the professional poker playing arena.
Germany has perhaps the highest tax on gambling winnings worldwide. While Germany has no online gambling tax for players, in other respects it actually has the highest gambling tax in the world. In fact, casino operators themselves are taxed at no less than 90% of their gross gaming revenue. Unsurprisingly, given the intense detail of tax regulations, taxes for private casinos come with a separate set of unique taxation rules.
Yet, if we’re discussing taxes enforced on the player themselves, there’s no country more famed for this than the USA. Here, gambling winnings are entirely taxable and the Internal Revenue Service work diligently to make sure they get what they’re owed. This is the case for both professionals and recreational poker players of a higher standard. Table games are taxed carefully as, contrary to a lot of casino games, they’re considered games of skill rather than chance. For example, slot machines would be considered a game of chance, while table games like poker and blackjack are seen as requiring a level of skill in order to succeed.
How to Pay
In some cases, the casino will take the tax cut of 24% from your winnings there and then. Of course, when you cash in your chips from a table game, the dealer or the casino can’t be sure of exactly how much you came to the table with. As you can imagine, this can be a tricky hurdle to taxation. That doesn’t mean you don’t pay! Instead, a player is obligated to report their winnings to the IRS when they file their yearly taxes. As of 2021, there are seven tax brackets. It’s important to note that the 24% the casino takes while cashing out is just an estimate. Yet, a player would have to earn north of approx $164,000 (including winnings) to owe more taxes on your winnings. However, should a player earn less than approx $86,000 they may even get some money back.
If you’re wondering do the casinos report winnings, the answer is yes. That said, there are specific criteria to be reached before this happens. This depends on the game of course! For poker players, this chiefly applies to tournaments where there’s a set buy-in. For poker tournaments specifically, a player must reach a winning of $5,000 before this alert is triggered and the IRS is notified.
There is one positive to paying taxes on gambling winnings in the US, however. If a player has a penchant for good bookkeeping they could find some of their losses are tax-deductible. Naturally, a player must prove all wins and losses with evidence. Still, these deductions are only applicable up to a specific amount. This means that gambling losses in excess of what you win may not be claimed as a tax write-off. So make sure winning is still the goal in your poker game!