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Maryann Guberman has been a writer and editor with many gaming publications, including Sports Form, Card Player, Poker World, Player's Panorama and Systems and Methods. She also has written and edited numerous books on gambling.

Feb. 17, 2007

Living With This New Bad Beat

Nothing travels faster than the speed of light with the possible exception of bad news, which obeys its own special laws. -- Douglas Adams

After all the complaining, after all the commiserating, after all the wildfires, after all the smoke and mirrors have given way to shattered dreams, U.S. poker players can breathe more easily knowing that if they've lost money at the online game, it wasn't the result of poor skills. The government has pretty well snatched their money away from them without so much as dealing a card. But of course the government didn't get that money. That cash stays offshore, with the money changers, with the casinos, and with the winners from anywhere but the great USA!

The whole ban has caused more controversy than anticipated. The Brits, for example, believe the ban on Internet gambling smacks of protectionism. Why, they wonder, would the U.S. maintain that betting on horses by way of computers is legal but poker and sports bets via computer are criminal? The World Trade Organization started its protest against U.S. attempts to criminalize Internet gambling several years ago. This group contends the ban is a restraint of trade.

But I think almost everybody has it wrong.

This ban isn't about money laundering because there are so many other ways to hide money transfers including such no-paperwork methods as Hawalas and Hundis.

This ban isn't about trying to capture the entire gambling market and make it an American-controlled institution (American being used here to indicate the states sort of in the middle of the continent plus a couple in other areas). Look at what's going on in Macau to see that the U.S. can't appropriate gambling for its own.

This ban isn't the result of pressure from amateur and professional sports. If it is then they didn't learn a thing from the day when a California track held racing without wagering and nobody showed up!

This ban isn't about the trying to legalize morality.

I don't even think this ban is an attempt to ferret out the owners of money exchanges to punish them for their businesses because banks exchange money all the time and nobody picks on them.

I think perhaps the design of the ban on Internet gambling was to punish those big winners for not declaring their poker (and sports) earnings on their income taxes. And the plan worked.

Yes, I truly think this whole situation is an attempt to get the IRS its fair share of income earned by U.S. citizens. (And if this wasn't the original purpose, it sure will be the end result.) Look, the major players, the lucky dudes who won $10,000 seats in the World Series of Poker and the ones who make big scores in other online tournaments likely to a man (or woman) made a gigantic mistake by publicizing their good fortune. I'm willing to wager (not real money, of course) that few if any of these folks declared their winnings as income. They became, in effect, part of an underground economy. But unlike other people who work off the books, these gamblers didn't keep their extra cash a secret! They boasted about it loud in clear; had their winnings published in national magazines, wrote about it on their websites or in newsgroups.

We all know that the IRS has deep frown lines caused by thinking about the people who underdeclare or don't declare income that doesn't have a W2 or 1099 involved. Like it or not, the income tax in this country is part of the lives of its money-earning citizens. Yes, we know that many people of wealth don't pay their fair share; yes, we know that many people evade and avoid paying taxes; yes, we know that it seems outrageous to have to work five months out of a year to pay those taxes but then again, things could be worse. I'm sure they are in other geographic areas.

Here's what I think. I think once the justice department grabs hold of the cash transaction information between U.S. citizens and outfits like Neteller, there will be some hell to pay. I wouldn't be surprised if a lot of people get slapped with big fines from the IRS for "forgetting" to declare their winnings.

Again, as I've been before, I could be wrong again. But I wouldn't bet on it. My suggestion? Gather together all your Internet transactions and get a good tax accountant. Take your game to the legal cardrooms and reinforce your knowledge that any money sitting in off-shore money transfer businesses is lost and was outside your control. Get your game back and enjoy it. Win some money (and don't forget to declare it). Wait out the situation (as if you have any other choice) and hope for the best. It's a longshot but there's always a chance you'll get your money even before Hell freezes over.

Unlike a prayer service or a prayer itself, Amen won't spell the end of this controversy or discussion of it. so this sermon will have to end with this: To be continued.