Which poker enthusiast doesn’t want to play in Vegas? Well, I finally made the pilgrimage, yahoo!, but it was probably my one and only trip!
This letter has nothing to say on the experience of the USA, Las Vegas or playing poker tournaments in Vegas.
What this letter is about is taxation.
I had heard rumors for years that winnings in Vegas are heavily taxed by the authorities. And it’s withholding tax, which means the casino takes the tax before you see your prize.
I scoured the web looking for explanations and details, checked all the forums and blogs, and found very little, and nothing conclusive. I emailed off to the big casinos. Crickets.
Wind the clock forward a few years…
I played in Vegas. I loved it, until. Until, I won, then I started to resent paying there. After much discussion with floor managers and poker directors, I finally understand how the tax works, and it’s like this (comment if you know otherwise): If your country (the country of the passport you registered at the casino with (although the law refers to tax jurisdiction (which might be where you live) – that seems too much work for the casinos so they go with your passport unless perhaps you hassle them heavily)) has a double tax treaty with a special clause for gambling*, then the withholding tax might be nothing or lower. A few countries have this treaty with gambling clause, not many. Australia doesn’t. If not, then 30% of your profits will be withheld where the prize was over US$5000. (Bizarrely, if your prize is under 5k then no tax; if your prize is over 5k, then 30% tax on profit) For example, enter a 6k buy-in and win a 96k prize, then 30% of 90k = 30k will not be paid to you, but handed over to the US Tax Office directly.
Unfortunately, most players would be caught unawares on this. There are no leaflets nor written explanations. I think the big tourneys have it in their fineprint on the websites.
Some say you can get the withheld tax back by submitting a return. Ummm… yeah, as long as you can afford the tax professional and the amount is big enough for any interest and you have time and you have receipt proofs for claiming. Would you bother when your tax paid is say 3k? 100k sure, but a small amount? I wrote to 2 agents that specialize in this service and couldn’t even get a reply email (read, I didn’t win that much).
Think about this, big picture: you are spending on flights, visas, transport, accommodation, food and drink, entertainment. Then, you are spending on gambling, eh, poker, then you are paying up to 25% rake, which the tax office will rake, and then how do they welcome you? If in the unfortunately situation, against the odds, you win, they’ll tax you 30% so your luggage won’t be so heavy on the flight out. By the way, that equates to nearly, umm, a 50% rake total. So, to bring all together, if you want to play poker with a 50% rake, I’ll see you at the felt.
Visa & Tax information for poker players in Asia
*Most explanations you’ll read just say double tax treaty. This is misleading. Most richer countries have a double tax treaty with the US but those treaties do not cover gambling.
**Most of Asia has zero tax on winnings.