The Week in Gambling

IRS Tax Policy for Non-Resident Gamblers Quashed by U.S. Appellate Court

A tax case brought to the appellate court of the District of Columbia by a chemical company executive based in Korea, resulted to the quashing of an IRS tax policy affecting non-resident alien gamblers.

The IRS, taxes foreign gamblers based on winnings on every bet placed, without considering the losses incurred during a gambling session. Such policy stands in contrast to IRS Tax Codes for U.S. gamblers, in which the basis of tax imposition is the net winnings, or the gains earned after deducting losses incurred in every gambling session.

The court of appeals sided with Sang Park, the Korean executive who challenged the US Tax Court’s decision to uphold IRS’ action of collecting as much as 30 percent tax on Park’s more than $500,000 slot machine winnings in 2006-2007.  Actually, in spite of the jackpot prizes he won in those years, Park ended up losing $4,663 and $45,130 respectively, since he continued to gamble at the same casino during his stay.

The IRS simply argued that the Tax Codes disallow non-resident aliens to deduct gambling losses, regardless of how the wins or losses are calculated, whether on a per-bet or per-session basis. This therefore gives the agency the right to collect taxes on each winning derived from bets placed on slot machines.

Judge Brett Kavanaugh, who wrote the decision arrived at by the court’s panel of judges, called the IRS argument as “a non sequitur”, a legal term that refers to a statement that does not follow logically the premise or evidence presented. Judge Kavanaugh cited that the IRS policy of not allowing the deduction of gambling losses from winnings, does not lead to a logical conclusion on how to calculate wins or losses for tax purposes.

After Field Trial, Ultimate Gaming Gets the Nod of Nevada Regulators

After completing and passing the Nevada Gaming Control Board’s (NGCB) field trial and assessments, Ultimate Gaming CEO Tobin Prior, announced with pride last Thursday that UltimateGaming.com is now officially the first legal online poker website in Nevada.

The stripped-down Ultimate Poker platform, launched in April 30, 2013, was just a beta version as far as the NGCB was concerned.

During the testing period, the NGCB gathered relevant and significant data, including those raised by customers using the site. This is in order to verify and ensure if concerns and issues pertaining to system security, age/location verification, game integrity, privacy protection and responsible gaming, are well within the boundaries of an Internet gaming operation, effectively regulated in accordance with the federal and state laws and regulations.

An example of a significant complaint put forward by some customers was Iovation’s involvement in Ultimate Gaming, as a service provider for security and player identification technology. This was notwithstanding the fact that Iovation CEO Greg Pierson and some employees were implicated in an online poker cheating scandal perpetuated in 2005, by another poker site known as UltimateBet.

It was later revealed that Iovation was not a licensed service provider but merely subcontracted for CAMS/Verifi, the official holder of a Nevada license. After a probe conducted by the NGCB, Ultimate Gaming, discontinued the use of all services and technology provided by Iovation.

Although there were also technical glitches that cropped up, NGCB Chairman A.G. Burnett, disclosed that “some of the technical issues were results of everyone testing the site.”

Another Internet Gambling Bill Introduced in Congress

The drive to legalize online gambling on a federal level is stepping up, as Texas Republican Congressman Joe Barton introduced legislation that aims to legalize online poker. HR 2666, entitled “Internet Poker Freedom Act of 2013” is actually Rep. Barton’s second attempt to pass such a bill, since his previous proposal in 2011 did not go beyond House subcommittee hearings.

The more than 100-page new document submitted by Rep. Barton contains provisions that do not follow suit to the online gambling act introduced by NY Congressman Peter King last month. Whereas, Rep. Barton is keen on legalizing only Internet-based poker, the focus of Rep. King’s bill is to standardize regulations imposed by every U.S. state that opts to legalize Internet-based gambling, in their respective jurisdiction.

Along with the Texas Representative’s proposal to make online poker lawful on a federal level, are provisions for specific regulatory rules and guidelines, including the right of a U.S. State to opt out of the legalization rule.

An example of a proposed rule is the imposition of a $1million fine per day, for web-based operators that allow the acceptance of wagers from online players based in geographical locations where Internet gambling is not lawful. Another proposal is to block a gambling website from operating as such for a period of five years, in the event that a site is found guilty of violating Internet wagering laws.

Although Rep. Barton believes his bill will have a better future over the legislation introduced by Rep. King, there are those who opine that both bills face uncertain future. Support coming from other Congressional members is weak, as the House Speaker John Boehner and House Majority Leader Eric Cantor, are both anti-gambling advocates.

Paddy Power Allays Parents’ Fears over Underage Gambling

When Facebook started offering Vegas-style casino games last year, the social network site came under fire from parents and campaign groups. Many believe that FB does not have the capability to prevent children from having access to the site’s real money gambling games (RMG). Most parents are well aware that young users, including their children and particularly those below thirteen, have lied about their age in order to open and maintain an FB account.

In light of the criticisms raised by campaign groups over the advent of RMG at Facebook, Paddy Power immediately reassured parents and concerned organizations that it would strictly enforce age-verification checking, when running their online sportsbetting platform at the social network site.

UK-based FB players who will be placing bets on sporting events at FB’s “Paddy Power In-Play!” will also go through the same electronic age authentication process used by PaddyPower.com. This is to ensure that only those aged 18 and above can open an account and gamble.

The online gambling site requires from customers any documentation deemed necessary to serve as proof of legal age, and reserves the right to make the request any time; as well as suspend the account of those who fail to comply. Any PaddyPower.com customer verified to be less than 18 years of age forfeits the right to all transactions, while his or her deposit will be returned.

Facebook, on the other hand, asserts that only their 18 and above users can view the adverts and play on FB’s “Paddy Power In-Play!” Moreover, the social network site insists that they choose their social casino partner carefully, by considering the Internet gaming operator’s adherence to strict regulatory guidelines for safe and responsible gaming.

Caesars Announces Dates and Details of WSOP Online Championship

Caesars Interactive Entertainment will be push through with the WSOP Online Championship in October, which will culminate just in time for the Final WSOP Main Event in November.

Promotional Free Seats   

Legal-aged online poker players, who pre-registered during the promotional period (May 29 to July 15, 2013), will have a chance to win a free seat to the Online Nine Championship via the $100K Freeroll promotion. WSOP.com will award the freeroll seats by way of invitation to pre-registered players deemed as eligible.

First off, pre-registered players must download the software, verify their WSOP.com account by August 31, 2013 and make a deposit within 30 days, once the site goes live to launch its real money game offerings.

Tentative Schedule 

The $100K Freeroll Event will be the first of the nine tournaments for the Online Championship series, and scheduled to take place on October 25, 2013. Invited players will receive an email containing a link to where they can claim their Freeroll ticket, up to October 24.

The tentative schedule for the rest of the WSOP Online Championship events will commence on October 27 up to the Main Event on November 02. Nine winners in all, including the Freeroll champion, will face off at the Rio Hotel Convention Center in Nevada.

The top three finishers will split the $100,000 prize money between them (50/30/20); but the first and second placers, will qualify to join the Final Table of the WSOP Main Event at the Penn & Teller Theater.

WSOP.com members, who will buy-in to have a seat in one of the online championship tables, must likewise be within Nevada’s territorial jurisdictions when playing.