There is a new decision from the Tax Court of Canada relating to poker: Cohen v. The Queen, available at http://decision.tcc-cci.gc.ca/en/201...011tcc262.html
The case is about a player who had net losses of $121k in 2006 and tried to deduct these as losses from a source. As I've been explaining repeatedly, the courts are not generally receptive to claims that losses from gambling should be deductible. Consistent with how I would conclude on these facts, the deduction was disallowed on the basis that the taxpayer did not play poker with a reasonable expectation of profit and, hence, was not playing poker as a professional.
Excerpt (but you really should read the whole thing):
"The Appellant was an associate lawyer practicing in a large Toronto law firm. After learning that the decision as to whether to elevate him to a Partner was deferred for another year, for the second consecutive year, in December of 2005, he claims he made the decision to leave the practice of law and to take up poker playing on a full-time basis for the 2006 taxation year. He testified notwithstanding his decision to take up this new career, that he did not resign from his law firm employer but started to avoid taking on new work and pass on his files with the expectation his actions would eventually lead to his termination which occurred on March 24, 2006. Under the terms of his termination letter, agreed to by him when presented, he would be paid, as a severance, his full salary for seven months, until October of 2006. He testified he earned about $200,000 per year as an associate in 2005 which was not disputed by the Respondent although no evidence was submitted of same. He also admitted he did not notify his former employer of his new venture, as his letter of termination required him to do, in an arrangement where he would only be paid 50% of the remaining severance from the time of such new employment, which was defined as including starting a new business in the termination letter agreed to by the Appellant. The Appellant testified his former employer continued to make his monthly payments notwithstanding that he never submitted the monthly letter confirming whether he found new employment or not, which included starting a new business, and that his former employer knew of his activities. The parties disagree as to the interpretation of the requirement in the termination letter discussed above."
"In his Statement of Business Activities filed with his 2006 tax return he reported income from “Gambling” activities of $81,283.30 representing his winnings or cash outs as he termed them as well as expenses totalling $203,274, consisting of purchases of $195,765 and business expenses of $7,509.73, which resulted in him claiming a loss of $121,991.43 from such activity for the year."
The court found that his losses were not deductible because Cohen was not in the business of playing poker professionally:
"With respect to counsel for the Appellant, the nature of the activity here, generally recognized as a gambling activity, is not an activity that I or many courts before me, could find has no personal element. The evidence in fact is that the Appellant was a hobby poker player since age 21 and then, at age 33 or so in 2006, takes the position he was a professional poker player engaged in the full‑time business of playing poker. The whole issue is whether he was still a hobbyist in 2006 notwithstanding his position. There is evidence he was also in the employ of a law firm for the first quarter of 2006, which at the very least suggests there may be some personal element for that period of time, notwithstanding the Appellant’s evidence that he was only winding down the practice in anticipation of being terminated. Moreover, the nature of the activity, whether it be called gambling or poker playing, is in my view generally considered a personal activity with the professional players in a minority. The Appellant himself testified the vast majority of the new players in tournaments were amateurs, suggesting it was advantageous to play them to relieve them of their money which was one of his strategies."
There are lots of other reasons and much more analysis given by the court. This is a must-read.