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TAX RULES WHEN YOU'VE BEEN STAKED
Hello all,
Can anyone please advise me on the following:
If I am staked for part of the buy in for a big tournament and am fortunate enough to get a big cash, is the proportion of the winnings that I then transfer to the person who staked me taxable in any any way - do either I or him have to pay tax on that in some form or other?
Cheers,
Matt
Can anyone please advise me on the following:
If I am staked for part of the buy in for a big tournament and am fortunate enough to get a big cash, is the proportion of the winnings that I then transfer to the person who staked me taxable in any any way - do either I or him have to pay tax on that in some form or other?
Cheers,
Matt
Comments
Be careful with those replies, lads, they are not strictly accurate.
In GREAT BRITAIN, yes, they are correct.
Overseas, not always so.
Most people familiar with staking are acutely aware of a very recent case (2 weeks ago) of a young chap who sought staking for a Tournament in South America.
Belatedly, it was realised that 20% Tax applies on all winnings in that part of the world. The result was an almighty hoohah as to who pays the tax.
No ill-intent or deviousness was intended, but it never occurred to anyone to check the facts in advance, the result being a right royal barney.
Tax can, but not "must", (in the case of Brits) be levied in the USA, too. The whole Jamie Gold WSOP kerfuffle, where it was alleged that he did not honour his staking agreement when he won the WSOP Main Event, was caused by EXACTLY that.
For clarification though, if we are talking Great Britain, correct, tax is not applicable on any poker winnings.
Thanks Gooner.
I only made the point because it actually happened, just 2 weeks ago.
The lad had won a package Online to a Tournament in Colombia, & so decided to sell some of his action, at a certain rate, 1.6 I think.
It THEN became apparent that there was 20% tax deducted from winnings in Colombia, which he had not realised, & so the staking agreement got a little bit heated for a while, whilst they debated who should pay the tax, as he had not mentioned it, simply because had not been aware.
No ill-intent or skullduggery existed, of course, just a genuine mistake.
Easily done. Things are rarely as simple as they seem at first sight.
If it is not agreed in advance, or mentioned, it has the potential effect of drastically changing the price at which the action is sold.
If he mentions it in advance, he can offer his action at whatever price he likes, & suggest that either party pays their share of the Tax, but it has the effect of changing the "real" price.
Staker has 10%.
Player wins £20,000. Staker gets 2k in the U.K.
Abroad the with a 20% tax on winnings which leaves 18k-
Staker gets £1800 or should he liable for 20%(£200) of tax bill and therefore get £1600.
** edit the above was typed whilst you were replying Tikay. What would be the norm or is it all to do with what price is being offered, cos as you say, the staker paying/not paying slice of tax effects the price.
I have witnessed next door the length of threads concerned with staking/% swaps not being fully agreed beforehand.
I agree the player being staked would not be liable for tax in the UK.
But the people who staked the player, would they not be liable for capital gains tax? As they are sponsors and not playing, if the winnings are above the threshold for capital gains are they not in danger of being taxed?
Cleansweep's question is kind of what I was unsure about.
I know anything I win wouldn't be taxable because its in the UK (the upcoming £500 at DTD), but I wasn't sure whether my staker might have to pay tax on any money I may (hopefully) then be handing over to him.
Let's say in an ideal world I won the tournament and picked up approx £100k - I know if the tax man comes asking thats fine and not taxable, but if I then transferred £20k over to my staker are there no tax implications on that transaction between me and him?
but why if you win the lottery are shares taxed unless you have signed a syndicate form?
So if you sell at 1:1 then someone will pay 10% of the buyin and get 10% of your winnings.
But if you're a really good player and can expect to go deep regularly then you can charge more, like 1.6:1 which means to get 10% of your winnings they'd have to pay 16% of the buyin. So you paying a bit more for your share, but you'd be willing to pay more to get 10% of Phil Ivey than you would to get 10% of me for instance.
Matt,
The CGT question. The reply by Gooner summed it up perfectly. Don't worry abiout CGT, it will NOT apply.
'GOONER said....
"....Capital gains tax arises from the disposal of an asset eg shares not within a tax wrapper or 2nd property. Your mate staking you would not be classed as an investment but a gamble on you making the money. Capital Gains Tax allows you to factor in losses as well as gains and therefore is unworkable in the gambling world....."
Sums it up perfectly.
Quite complex that.
First up, I'll explain it, but please remember that Staking is not something that Sky Poker would ever permit to be done via the Community, there are too many risks associated, & it it is not really on message for this particular business, or appropriate to this Forum. The subject is fascinating though, so I'll work through it.
I think I said he sold at 1.6, in fact it was 1.55, my apologies.
1.6, these days, is not unheard of, not at all - I know several who charge 1.8 or even 2. But it is pretty rare, & rightly so. Most staking is done at somewhere between "spot" (NO mark up) & 1.2.
It's a free market thing - peeps can sell at whatever the market will stand, & if stakers want to bid 1.6 & above, they can & will. It does happen. The market is not exactly sophisticated, or always understanding of what represents "value", so some eye-watering mark ups do get through.
"Mark-Up" is supposed to represent the players value. If the guy thinks he has a 20% edge on the field, he might seek 1.2 for "parity". But.....
The staker (the guy who buys his action) would not have value if he was paying 1.2 for someone who had a 20% edge, & that makes no sense. When we buy apples for two bob a pound, we need to sell them for half a crown to turn a profit.
So if the guy has a 20% edge, he needs, really, to sell at LESS than 20% mark-up.
Turn that upside down, & now it tells us that if a chap sells at 1.6, he needs an 80% or so edge to give the staker a decent profit margin, over time, & all things being equal.
How did he come to sell at 1.55 then?
For one, he IS a very good player.
He is a full-time pro, & has turned a profit of around £100,000 in each of the last 2 years. He plays cash and Tourneys. Oddly (to me, anyway) for most of that, he was staked, which makes no sense to me, but thats how things work these days. He deffo has an edge over most fields - over time - but whether he has a 1.6 edge is another matter altogether, upon which the jury remains very much out.
Usually, when a player sells action, he offers it at a mark-up, & buyers have the right to buy, or not, depending whether they think it reps value.
However, on this occasion, he used a different method to sell - an Online Auction.
He offered 20% for sale to the highest bidders. Auctions change the dynamics completely, & because of the psychology of poker players, means a much greater selling price can be achieved.
One guy bids for, say, 5% @ 1.2, then the next guy says "ooh, I had better bid 1.3 to ensure I get a bit", & so it goes on. As you can imagine, some appendage waving is present in all this.
Bids started at 1.1, 1.11, 1.22, 1.23, 1.28 & 1.39.
Anyway, the price rose & rose as players tried to get a slice of his action, & eventually the auction closed with a price of 1.55.
The top 5 bids were 1.66, 1.61, 1.6, 1.59, & 1.55, & so by the Auction Rules, the price was set at 1.55.
As it happens, I generally try to buy a bit of action in this lad, he is a grand sort, honest, a great player, a good friend, & respectful to others, & when he was selling "traditionally" at 1.2 or whatever, I usually took a bit.
However, on this occasion, I sat out, because after dipping my tie in "Auction Staking" on one or two occasions, I formed the view that they do not suit me, I decided a while ago never to buy via that method again, as it just forces the price up. Good for the seller, bad for the buyer, & I'm a buyer not a seller!
I have been quite a big buyer of action for a while now, but in the process I have learned - with the help of those who understand these things better -that I need to be careful what I pay, as prices have been rising unrealistically for a while now. The truth is, MOST players over-rate their own ability versus a random field. They also give it the "it is a soft-field" stuff, which I just ignore, because it does not work like that in real life.
I still buy action in good friends in regular tourneys at bad prices, simply because it's fun to support your mates, & as I don't have ther time (or, some may say, ability these days) to play much Live Poker, so I get a bit of poker fun vicariously, & a good "sweat".
But I also buy "serious" action, & in those cases, I am now quite selective as to the price I am prepared to pay.
Where possible, I prefer to buy where the package is a series of Tourneys, rather than just one - that helps with the variance. I had a piece of a lad in Vegas this year which was for no less than 22 Tourneys, which looked perfect for me.
He failed to cash in the first 21, & binked a quarter of a million in the 22nd & final one!
PS - I do not sell my action, & never will, (I don't agree with the logic for the most part), but by tradition, friends usually ask me for a bit when I go to Vegas each year, & I sell at spot, no mark up.
However, Neil Channing approached me recently & offered to buy some action in me. "What price?" I hopefully asked. "0.7" he replied.
Marvellous. No wonder he is laughing.....
Just a quick PS to that.
Prior to him joining Sky Poker, I have been buying action in Julian Thew for around 10 years, & have done very well so far. But I have never paid a penny more than "spot", & we have never even discussed "Mark-Up".
Times are changing, there you have Old Skool v NKOTB.
Old Skool never charged Make Up, or not that I recall.
The Poker World changed when they invented the interwebz.
Make sure you are at the SPT Grand Final, I'm SO gonna raise you all-in if we share Tables. Any two will do.
You are right in surmising that very few are worth 1.6 or more. That is not to say that a lot THINK they are worth that though. Big difference.
PS - Sent you a PM.
Hi Matt, I've sent u PM.