A 10% tax on all deposits off the top? No, I can't support the current bill, sorry. I thought the PPA was standing up for the Freedom to play poker online, not the Huge Bribe via Taxation to play poker online. This sets a terrible precedent to start out with a "sin tax" because we all know that sin taxes, on booze and cigarettes for example, only ever go up, and supporting this bill would be basically conceding that playing poker is immoral.

I urge other 2+2ers to read the thread in the legislation forum before sending anything.

The 10% tax isn't on players. It's on sites. It sounds high, but that's the number the sites are supporting (as evidenced by their support for the bill). I believe it's cheaper than their current cost of doing business.

I'd prefer zero taxation, but where would such a bill go?

For more on the urgency behind this, check out: Why Should Poker Players Support Federal Online Poker Legislation?

Conan, as I've said elsewhere.... do you seriously think there is ANY chance of getting legislators to enact a law, about a game, without some quid pro quo??

Seriously? How, exactly, do you think that would happen?

Remember most live in a fantasy world where they can get everything their way. Most do not understand how bills get passed and how impossible it would be for us to get a bill without taxation, so they just go back to their fantasy world where poker players have the biggest clout ever and can tell Congress exactly what they are going to do.

Don't fool yourself. Sales tax isn't technically on the customer who buy things either -- it's on the store-owner who sell things. However, the customer still pays it at the register.

Well, for starters, maybe the PPA shouldn't flop over with its legs spread in the air for the first Senator to come along with his **** in his hand.

I don't see a reason to concede defeat on certain basic principles, chief among them, I don't believe playing poker is immoral, so why the sin tax?

Edit: Schwallie, to be clear: I have no problem with taxes on each player's net earnings akin to all other U.S. income taxes, and could support such a bill (such as Congressman Barney Frank's, AFAIK).

Huh? Sales taxes ARE paid by customers. They are merely remitted by store owners. That's not what will happen here. Sites will not deduct this from players' balances (and are prohibited from doing so in the Frank bill).

Also, sites cannot simply pass all this onto the customers. That's not how economics works. What happens is that the market determines rakes and other costs to play. If sites could get higher rake now, they'd be charging it already.

The best thing is that it's industry offering up this benefit. They are lobbying for it and pushing hard to pass it. LOL at the players thinking they are somehow helping sites by fighting them.

First, just as a technical note, normal sales taxes are paid partly by the store/manufacturer and partly by the customer as are all taxes depending on the elasticity of demand.

Second, I agree with you on the dangers on sin taxes and what they can do to poker, I have problems with the current bill, and I also urge readers and posters to make sure they understand what's in the bill before supporting it. However, the 10% deposit tax is really not a giant issue. Its not really a sin tax and its not labeled as such, its set up akin to a premium tax on insurers for instance. Id rather it not be in there, but the Government is going to want its cut and Id rather have this than additional taxes on the back end. Given the cost structure of the online poker business, really not going to be a huge issue at 10% if it can be capped to allow for high stakes games. The sites are fine with it.

I have concerns about the ability of Congress to later raise that figure and think the license period should be for a long period of time to lock in that rate, but I think the 10% tax is not as bad as it appears at first glance. Again, this is from someone who wouldnt support the current bill as written for an up or down vote.

There's nothing in the legislation that calls it a "sin" tax. If it were, it would probably be directly on players, like cigarette and alcohol taxes are.

The Frank bill taxes sites as well (via the McDermott companion bill).

Every store I shop at passes the sales tax along to customers. Why? Why not, say, raise your prices 5% and advertise being sales tax free? Because passing it along directly ensures that when politicians go to raise the tax, everyone feels like they are effected by it. If the government sees the sites invisibly absorb the 10% deposit tax, they will just increase the tax unto the point where the sites are actually forced to pass it along.

LOL at thinking the deposit tax won't get passed along to customers when all is said and done. Of course the sites don't care about that. But a lot of fish aren't going to want to pay a 10% premium just to lose their money, and on top of that, that's 10% less money to be won by everybody else. This is not the bill we want, imo.

Technically, no sin tax is labeled a sin tax, but I know a sin tax when I see one.

It's not a road I want to head down, that is for sure.

The sales tax is passed on to customers because it's supposed to be passed on to them by design. In fact, when stores pay the sales tax themselves, it seems they have to go out of their way to say so to keep from being accused of not collecting it.

This tax, OTOH, is not to be collected from players. Sites are explicitly prohibited from doing so in the Frank bill, and are implicitly kept from doing so in the Menendez bill.

You prefer the road of attacks by the DoJ? How about tough games and tougher cash-outs? How about a system where sites will spend well over 10% of deposits to navigate this system?

You do understand that it is likely the site's cost of depositing and cashing out will likely go down with regulation and a 10% tax, right? They are paying huge fees to cash us in and out currently, and everything would cost much less if they could do it legally and with regulation. They are on the side of wanting a 10% tax and supporting the bill because the 10% likely still costs them less than they are currently having to pay.

I can't find such language in the Menendez bill.

I'm not saying I love the status quo, but selling poker legalization to Congress as a cash cow is a mistake, because, mark my words, the players will be the ones getting milked.

Any facts to back this up, or is this a faith-based statement? Aside from the recent seizure in New York, of course. If they have a 10%+ overhead on deposits and withdrawals, that would mean every losing SnG and tournament player is a net loss for the sites, for example. Do you really think that is the case?

They do charge for cashouts often. They don't pay per cashout, I'm sure they have deals in place that would make the smaller players offset the bigger and such. The addition of easier security measures for their cash, easier cash in and cash out, using domestic things instead of international, as well as the HUGE increase of players if legislation comes leads to a huge profit increase for them.

I mean you're acting like 10% and regulated means they are going to pass it on to us so they don't lose their profitability or something. You realize their revenue would be increasing dramatically if it gets legalized, right? I mean even if the idea that the cashouts themselves would end up costing more for them(Most seem to be thinking they would be cheaper with legislation anyways), that still doesn't account for the fact how much their revenue would increase. Not to mention the bills explicitly say they cannot pass the fees on to us. Or to mention competition leads to smaller rake(You think Google is going to need 3% on pots? Or will they stick to their business model and take the .5% and profit on volume?)


As I see it, you there are two sides currently. You argue for:

Don't pass bills with extra taxes, because it will be passed onto us(which isn't allowed), while ignoring capitalistic competition and the immense profitability as other reasons that also wouldn't happen. You support bills that don't add extra taxes for the sites, a bill that will NEVER pass. We have been told many times it is literally impossible. So you are arguing for the status quo or worse, and I think we are all starting to agree it is likely going to get worse.


I like your idea of the no-extra-tax and all that, but I mean are you thinking about this at all? I would love if you were president and could make this happen, but are you looking at this realistically? Also, even if looking realistically and still thinking the tax is somehow a worse idea than what we have now, are you considering how much more money the sites make by being legislated? You think they are going to double* their profits, then just illegally pass on the fees to us because...? This doesn't seem sensible


*double is obviously just a random approximation.

Can you show the math on this? Ignoring customer acquisition costs for the moment, the tax still leaves 90 cents of every dollar deposited to be divvied up between the sites and the winning players. Since the incremental cost of serving a player, once the money to acquire the customer is spent, is basically zero, the sites share is all profit to the site. I think you are saying that the vig is less than 10% on those tournaments so the sites must be losing money, but that doesnt work because each dollar deposited is churned more than once (this is a similar principle behind rollover requirements on reload bonuses) so the sites share of that incremental 90 cents is more than just rake percentage*dollar.

I think you arent doing the math right, but Im willing to be proved wrong. The fact that the sites support the 10% tax as easily doable lends some empirical support against your statement.

Again, part of the tax will be passed on to players all things equal (there are offsets from lower transaction costs in this case). It cant be taken straight from the deposit, but basic economic theory teaches that part of the tax is paid by the site, and part by the customer no matter who you levy the tax on (simplified, but true enough for the purposes of this discussion)