New tax code will go into effect in March of next year that requires online poker rooms and casinos to withhold portions of any winnings of more than $5,000 for the purposes of reporting players to the proper tax authorities and ensuring that everyone pays their tax debt.  The law only applies to poker rooms and casinos established and operating on United States soil, as the United States legislative and judicial system largely considers poker to be considered a form of gambling rather than a skillful activity.  The exorbitant taxation of poker players has long been a thorn in the side of players who don’t feel that the way that gambling taxes, especially poker, are calculated and collected is particularly fair.  Earnings in the game of poker are based entirely on the user’s efforts and skills applied towards winning and earning money against other skilled players with the exact same odds as each other.  This focus on skill versus chance theoretically should qualify poker as something altogether different from games such as roulette and blackjack.  Unfortunately, the game continues to be taxed at extremely high rates, and players continue to do their best to hide any gambling income from the United States government and the Internal Revenue Service.

The exact amount of withholding will be 25% of any winnings of more than $5,000 and applies to any gambling or gaming institution on United States soil, including, theoretically at least, areas such as the Virgin Islands and Puerto Rico.  Considering the amount of gambling that is done in the United States in the form of Texas Hold’em poker and Omaha styles as well as stud poker, the amount of money collected from taxation of gaming and gambling is very likely to be a significant amount in comparison with the taxation of other types of income overall.  Considering the professional nature of many players dedication to the game, it would seem logical to recategorize the winnings and earnings that are garnered from the playing of poker in various tournaments and cash games in the United States.  Until such re-categorization is attempted, the professional poker player and participants in events with high payouts such as the World Series of poker in Las Vegas will be subjected to the current level of exorbitant taxation of poker winnings and earnings.

Because of the stipulation that the law applies only to gambling facilities located inside the United States, there is no such stipulation or enforcement and online gaming establishments, as no such businesses are allowed to exist inside the United States.

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