Las Vegas Review Journal – Nearly a year after the launch of real money online poker in Nevada, there’s a new wave of players who must pay taxes on Web poker winnings from 2013. In the years before regulated online gambling, offshore sites that skirted the law to attract U.S. players may not have cooperated with the Internal Revenue Service. But the legislation passed in Nevada and two other states means that the IRS has the means to easily trace online winnings.
Nevada’s first regulated real money site, UltimatePoker.com, launched in April 2013, and WSOP.com followed later in the year. South Point launched a third site, RealGaming.com, this year.
Nevada is the only state that does not have a data-sharing agreement with the IRS, but the federal government can deliver a summons to one of the regulated sites and track down a player’s records, said Russ Fox, a federally licensed tax practitioner in Las Vegas who has specialized in gaming for 15 years.
“Now if the IRS wants to get the records, they can,” Fox said. “Those companies will be cooperating. They have to.”
Brad Polizzano, a New York tax and gaming attorney, said more gamblers may be truthful about their winnings simply because the money is being tracked in a regulated market.
“We’re still early in the game,” Polizzano said. “The more dollars that go in and out of these sites, the more the authorities are going to look and see if there are players (who) are not particularly honest.
“The IRS is in position to get the message out and make an example of some taxpayers who don’t (pay taxes on Web gaming).”
The gaming sites operating in Nevada so far only offer poker.
For tax purposes, winnings online are treated the same as winnings inside a brick-and-mortar casino, the tax experts said.
In cash games, where players wager with table stakes, players must keep their own records. But tournament winnings are treated differently.
Here’s what must be reported on a W2-G tax form: $600 or more in a “freeroll” tournament, where there is no dollar amount for the buy-in, or a net of at least $5,000 in a tournament. Casinos often automatically withhold 25 percent for the government.
Anyone who falls into one of those categories is automatically emailed a request for tax information, said Seth Palanksy, vice president of corporate communications for Caesars Interactive Entertainment Corp., which operates WSOP.com.
