Online poker proposal: too many pitfalls

Aug 11, 2009 5:05 PM
The Inside Straight by Joe Awada |

Legislation could drive sites away

A U.S. Senator last week beat Rep. Barney Frank to the punch when he introduced a bill that would legalize online poker.

Many poker supporters including the Poker Players Alliance rejoiced at the news, but perhaps they should read some of the fine print in Senator Menendez’s proposal.

For instance, a summary of the legislation states that online players must be "physically located in a jurisdiction where gambling is legal."

Does this mean you have to live in Nevada, Atlantic City or on an Indian reservation?

Also, "any state or Indian tribe can opt out of regulations, and it will be illegal to accept bets from individuals" who live in those states.

So, if Nevada didn’t want possible gambling dollars drained away to Internet poker rooms, it could exempt itself from the proposed law so no one here could legally participate.

Finally, the proposed regulations dealing with taxation are particularly troublesome. First, the poker rooms must pay a 10 percent tax on all the deposits placed into player accounts.

Not many poker sites will sit still for paying a tax on deposits, rather than net income, which is customary for most casinos.

In fact, these types of increasing taxes are driving online betting sites out of England, forcing them to set up shop off-shore.

The proposal also would require withholding of taxes on the net winnings of players. There’s very little precedence for this in legal casinos, sports books, card rooms and race tracks. How do they determine when net winnings occur? At the end of the day, at the end of the week, at the end of every hand?

Realistically, the proposal appears to have many stumbling blocks to warrant welcoming it with open arms at this point.

Question? Comment? E-mail me at: Joe Awada