After much research, I have found governing Federal Rules that govern Sweepstakes, Contests AND Games of Skill, which the Wexler Bill relates to.
The latter, Games of Skill of course is our concern, though the whole section is together, just Games of Skill have more liberal payment requirements and NO free entry requirement.

The following is why, the Wexler Bill is good for us since other options are not.

This can be read at www.ftc.gov and you can search or use the link:
http://www.ftc.gov/bcp/edu/pubs/cons...ing/tel17.shtm


From that link it states “Unlike sweepstakes, skill contests may legally require contestants to buy something or make a payment or donation to enter.”
Sweepstakes, as we know require an option for free entry.

Now, taxes. Sweepstakes winners are REQUIRED to provide the Sweepstakes managing firm information AND file a form allowing the winner to be issued a 1099.

http://en.wikipedia.org/wiki/Sweepst..._United_States

Stated, “Winner filling any required federal or state tax forms with sponsor's sweepstakes promotion agency;”

Next, the IRS seach concerning Sweepstakes Taxes:
http://www.irs.gov/instructions/iw2g/ix01.html

From the IRS about the ‘Sweepstakes’ w2G required by the Subcription sites. A note here, there is free entry, so anyone winning more than 600.00 meets this requirement since the 19.95 fee paid (if you pay it) is for “other” considerations.

http://www.irs.gov/instructions/iw2g/ar02.html#d0e374

Now, Skill Games, specifically Poker has its own IRS W2G requirements (note, the sweepstates will also meet this requirement depending on the amount won there).

http://www.irs.gov/instructions/iw2g/ar02.html#d0e548


NOW, to the Wexler Bill.

You will notice the FTC does not define Games of Skill and this the Wexler Bill does in section 1.
On this note, we have 3 options:
1. Endorse the Wexler Bill
2. Petition the FTC to define these games and include poker (not likely).
3. As Sen. Kyl said, if we want poker included here, go to court and have a Federal Judge say so (a possabilty that we may have to resort to).

Section 2 of the Wexler Bill deals with taxes and as we know, we want better tax requirements.
Here again, we have 2 options:
1. Petition the IRS to change the current requirements, not likely at all.
2. From the Wexler Bill, it requires new tax regulations and here we could fight for what we want.
a. Pros have no problem netting wins / losses they are OK.
b. Casual players lose out here and we need new regulations allowing netting wins / losses on line 21 alone, not as currently required filling out a long form and forgoing standard deductions, for most amateurs this is not viable.
Win the right to number two in tax court, again, not likely.

In conclusion:

1. I am dissapointed in the subscription sites taking the ‘Sweepstakes’ route rther than the Skill Games route, I feel like they threw poker under the bus, so to speak.

2. Our fight may not center on the WTO decision and the U. S. withdrawal, it concerns gambling, skill games are covered by OTHER governing rules / regulations and not considered gambling.

3. Our fight is not wholey with the UIGEA, rather, as we have pretty much agreed, the overblocking and failure of the proposed regulations to properly insure LEGAL activities are not blocked.

4. We can support the Wexler Bill and try to get new favorable tax rules and cash games addressed along with all poker or try and get the FTC to define Skill Games to include all poker or go to court.

5. The Wexler Bill by defining poker as a Skill Game will allow onshore U. S. based poker, the same as Solitaire, Hearts, Spades and other card games that involve skill.

obg

Nice work OBG.

Support the Wexler bill. It is our best hope (its even better with some tax law changes, but that is hardly unrealistic once we get to the skill games category and it certainly doesnt make our current legal tax obligations any worse - it can only help the enemies of poker if we are seen as not supporting the Wexler bill because we want to keep open the ability of avoiding our taxes).

Skallagrim

Thanks Skall, I hope we can now narrow this long post into a simple, concise presentation to our reps in Congress and perhaps get back to our weekly action plans using something like this.

obg

If the Skill bill stated that only these regulations were the ones that applied to skill games, including poker and stated that it superseeded all state laws, then I would support it. The present Skill bill is much broader. I do not want to risk having to obtain the better tax provisions and better provisions from Congress after the Skill bill becomes law. I would rather have no additional laws.

The only problem with the W2G requirements is that if the winner does not provide a tax id number then 28% is withheld from all winnings over $5,000. This raises some problems for online poker sites. What about non-US players? What about ring games?
I do not want regulators to decide these issues. Any skill bill needs specific provisions that do not permit any withholding of taxes.

The point is, in B&M, these are in place (including foerign winners in the U.S.), we would never get a regulation saying no tax is withheld as a special treatment for online poker versus the B&M's. They would fight this tooth and nail.

Ring games, as I noted, NEEDS to be specifically included in poker defined as skill. As it stands, SnG's and MTT's can meet the requirements I believe, cash games are another problem as it stands now and where the DoJ action will center on, when, not if, it happens.

Legislation, as we see in the UIGEA and IRS tax rules now (recently changed if we recall) happen by regulation, not legislation.

Getting poker (cash games specifically) included as skill is the first step, the the tax regulations.

More importanly, the 5K withholding rule is currently based on individual tournaments, unlike the Sweepstakes that is cumulative over time, another plus. The latter would be a disaster for poker, the previous really effects very few players.

Really though, asking for inclusion and equal treatment is a much easier and more likely outcome than special treatment.

Heck, even if we get this, the real fight will begin. Stopping states from amending / enacting laws to prevent sweepstates at all, or prohibiting the current FTC thing allowing skill to enjoy the current special treatment with required payments with no required free entry methods.

obg

Obg, you state the reasons that I oppose the Skill bill. I don't want to have to fight over IRS tax regulations and state laws to preserve online poker. What happens if online poker loses the fight?
IMO, and Attorney Preston Ode, right now these fights are not necessary. I want to keep it that way and I think it is possible to keep the status quo.

The IRS, no, no one wants to battle with them over anything, but at worst the current IRS reges concerning B&M would apply to online. As I sated, few players would be affected by this.


As to state, I have been giving this thought, and I have no concrete answer, other than that precise fight is being waged in Mass. right now.


Somewhere, somehow in the Wexler bill (or some similar final product) there would need be a 'poison pill' so to speak that would entice states not to follow states like Washington. This pill would also need to be a 'happy pill' one that would entice states like Washington to reverse course.

That is why I suggested and stated, perhaps a action plan needs to be developed. This needs to address concerns and potential down sides.

I just do not believe the current status quo will last, though with an unsuccessful prosecution that would be a winner for us all, to a point.

Even this has perils. If say P Stars were somehow indicted and actually arrested and they won, states would quickly act to remedy this thus nullifying our victory.


Either way, the course of action / inaction each have perils.

obg

How do we know that poker could not already be included in the skill games exclusion? I support the Wexler bill too. It is simple and quiet. However, I think that its passage anytime soon is unlikely. It seems to me litigation designed to have poker included in the already existing skill-games exclusion is a path that should be followed in addition to pushing the Wexler bill. But how do we do it?

The Wexler bill has teeth. This is in the form of the tax provisions.

Playing on the Internet is a home game with people all over the world run by the offshore sites.

Now picture your home game with an IRS agent at the door. Nobody has a problem with this?

People say "You should be paying your taxes anyway, so that shouldn't matter." For me its a totally different issue. Its the issue of Big Brother spying on me and my right to privacy.

Why are people so quick to throw the right to privacy under the bus?

I'm not even sure we want poker to be "declared" a game of skill by law or the courts.

I mean will sites now have to maintain a ranking formal ranking system (i.e. backgammon, spades)? This could change the game too.

I mean political sharks like Bill Frist could attach any sort of amendment to the Wexler Bill with unfavorable consequences that could kill the game as we know it.

We know what the Wexler bill looks like now.

What will it look like when whoever controls the Senate gets done with it?

From your mouth to God's ear. Obg, this assumption may, or may not, be accurate. Also, the IRS could make the B&M regs worse by requiring withholding of taxes upon cashouts and then apply them to online poker.

JPF,

Could you elaborate a little more on your position and that of the attorney you reference? Are you basically saying that the IUGEA does not affect poker because of its wording? If that is the case, what if there is a successful prosecution of an online poker site, like a small one that will buckle without a real fight like neteller did and the publicly held companies virtually did by withdrawing?

Also if your position is that we shouldn't push any bill but just hope the status quo holds and that the US facing sites are able to overcome funding obstacles, is there a reason to then have the PPA?

Bluffthis, go to the PPA website and listen to the rounderradio show called "The Great Debate." The attorney is Mr. Preston Ode. I support his position on the IGREA and the Skill bill. Also, I have posted more comments on the PPA legislation forum with some recommended changes to the Skill bill. You can read them there.

JP, one more point to ponder.

The status quo that keeps being talked about will change; let us not forget the U. S. is withdrawing the WTO agreement on ALL gaming and if successful, poker will virtually disappear from the U. S.

The original agreement, signed with some 151 countries, is only being contested for compensation by, if I recall correctly, 27 countries.

That does NOT mean it the sites can simply move to one of those non-compensation countries, the commitment will be gone from ALL countries. These other countries are simply giving the U. S. a free pass.

Those seeing and gain compensation will then, in all likelihood, clamp down on those sites doing business here, effectively stopping them.

What then? No poker sites are operating from the U. S., no overseas companies will be allowed to do business here, at least not reputable ones.

NOTE: Though Canada has agreed as well, there is some question what effect this will have on the sites licensed by the Mohawk Indians.

obg

I doubt the WTO decision will affect Stars and FT et al in the least. You still have to arrest them and have them extradited. Im sure locations were chosen with favorable laws/extradition agreements. I doubt Bodog and WSEX will cease being in Antigua either. I just don't think the DOJ has the time/resources right now to do massive arrests and prosecutions. Basically, we have to wait out this year and then see the focus of the next leadership set. We're still waiting on an iMega ruling as well. Swatting poker away as it is with a stick will be harder than you are suggesting. Massive profits are still being made and I'm sure industry insiders have fallback plans to keep supplying the US customer base that will pay to keep playing. We may not be able to keep making a living(I know my income is running at 1/3 preUIGEA), but we can still play. The "status quo" isnt an irrational lifeboat to cling to, it has legs. It sucks, but poker still has no organized central champion to orchestrate resistance thru. I doubt that day will ever come either.

Can you tell me more about the legal activities you think are blocked?