April 12, 2014
A recent experiment conducted by an Online Poker Report journalist on ACH transactions at online poker sites regulated by the state of New Jersey produced results that are both edifying and positive. If you have never made a deposit at a New Jersey online poker site but would like to, or if you have tried without success, you will find this analysis helpful. But what ultimately is demonstrated by the “test” is that state-regulations of online poker are working and effective, much more so than the unfettered, unsupervised sea of unregulated, offshore online poker sites.
The first-person look at deposit and withdrawal transactions at each of the six New Jersey online poker sites sheds light on the most widely accepted method for online poker funding, the ACH option. The Automated Clearing House transaction is a cash transfer from point A (the player’s bank account) directly to point B (the player’s online poker account).
Deposits prove to be instant with no hiccups and little “pending” time, if any at all, with no fees at any of the sites. Isn’t money coming out of the bank always seemingly flawless and immediate in most realms? New Jersey online poker is no exception. It’s when we request money be paid into our accounts that it seems to have an extended commute. The true test is on New Jersey online poker withdrawals.
The withdrawal process for both WSOP.com and 888 requires additional documentation of identification (e.g. copy of recent bank statement); Betfair requires no additional identification than was already on file, though they use Certegy, which charges a 1% fee, refunded by Betfair upon completion of transaction. Note that to make a withdrawal via ACH on both Borgata and PartyPoker, you must have made a prior, successful deposit. This is not a requirement at the other four New Jersey online poker sites.
Three days after the withdrawals are requested, three of the six state-regulated New Jersey online poker sites, 888, Betfair, and WSOP.com, show the transfers in the player’s bank account, though are still “pending,” but are cleared and available in the player’s bank account by the end of the third day.
However, after three days, there is no word from Borgata or PartyPoker, both of which share software, tournament schedule, and player base. Borgata and Party are viewed as separate sites, but the only true difference is their promotions. These two sites do advise that withdrawal times vary across different payment methods; however, both sites present pop ups during regular play offering the opportunity to reverse the withdrawal transaction in order to free up more funds to play with. According to the site, these transactions are still pending (and it’s not too late to change your mind). By the end of the third day, both sites have approved the withdrawal requests. On the fourth business day, both withdrawals hit the player’s bank account.
All five ACH payments show up in the player’s bank account with proper casino transaction names since online poker transactions are legal in New Jersey.
On the other hand, UltimatePoker.com offers cash outs via US mail only, or via pick up at Atlantic City’s Taj Mahal Casino. The site claims that an option for a electronic transfer withdrawal will be available sometime in the future. In the case study, it takes three hours from time of request for approval. It then takes seven days for the check to print. In five more days, the check travels from Las Vegas to New Jersey. The outcome was 12 days (eight business days and four weekend days) for the UltimatePoker.com withdrawal to get from point A to point B.
Five out of six New Jersey online poker sites cleared ACH electronic transfer withdrawals within four days. Only one took 12 days.
The final piece of advice from the author of the study is to open a new and separate checking account that you use for only for online poker transactions at the bank of your choice, so that you can control and track your pending transactions and keep up with how much your depositing and withdrawing.
April 8, 2014
Now that tax season is in full swing, many online poker players in states with regulated online poker are faced with paying taxes on their online poker winnings. Of the three states where one form or another of online gambling is legal and regulated, Nevada, whose online poker market is now one year old, is the only one that hasn’t forged an agreement with the IRS for data-sharing. However, federally licensed tax accountant in Las Vegas, Russ Fox, says that doesn’t matter.
Whereas in an unregulated market US players could have avoided paying US taxes on online winnings, legislation passed in all three states (Delaware, New Jersey, and Nevada) gives the IRS permission to trace the online winnings of any player. The federal government can deliver at any time a summons to any regulated site, requesting a report of a player’s earnings.
With 15 years experience in gaming tax matters, Fox says, “Now if the IRS wants to get the records, they can,” Fox said. “Those companies will be cooperating. They have to,” referring to the three Nevada online poker sites, UltimatePoker.com, WSOP.com, and RealGaming.com.
New York gaming and tax attorney Brad Polizzano, believes that the tracking of their winnings by the IRS will cause players to be more honest about their winnings.
Polizzano says, “We’re still early in the game. 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.”
He adds, “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).”
Tax experts say that online winnings are being treated like land-based casino winnings, where in cash games, players must keep their own records and tournaments are handled differently.
The law states that if more than $600 in won in a “freeroll” tournament (that has no dollar amount buy-in) or if more than $5,000 is won in a tournament, these winnings must be reported on a W2-G tax form. Seth Palanksy, VP of Caesars Interactive corporate communications, over WSOP.com, says that players are automatically sent an email when they fall into one of these two categories.
Palansky says that the casino withholds 25% for taxes up front, and most players prefer this, so that they do not have to deal with it.
It is also understood that players can request a report of their wins/losses for the year to keep up with cash game taxes owed.
Furthermore, if a player is considered a professional, he or she must pay self-employment taxes and income taxes in addition to what recreational players pay on this “miscellaneous income.”
And because the main goal of states in regulating online poker is to bump tax revenue, which they earn from the sites, as well as the players. Polizzano says that federal legislation that would legalize online poker across the country will require that each site report to the IRS every player’s winnings, should it pass on Capitol Hill.
He adds, “When you compare even brick-and-mortar play or offshore sites, it’s not easy for the authorities to obtain documentation of every single wagering transaction that a player enters. That’s completely different in a regulated market. It’s going to be a lot easier for the IRS to prove whether a person playing online in Nevada is declaring all their wins and losses.”