Win a Tourney, Pay the Piper

Accountants around the U.S. have been notified of a new tax law which requires casinos to hold back 25% of any poker tournament payout $5,000 or greater for taxes.

Specifically, taxes must be withheld from “Proceeds of more than $5,000 from a wager placed in a sweepstakes, wagering pool, or lottery,” with some exceptions.  Obviously, a poker tournament amounts to a wagering pool, as players “pool” their buy-ins to create the kitty from which the prizes are drawn.

So, all you weekend poker player out there who find yourselves in the fortunate situation of having emerged victorious in a poker tournament out in Vegas, Atlantic City, or Biloxi, you had better hope you don’t win just over $5,000.  If, say, you win $5,500, you’ll only go home with $4,125.  You’d be better off winning $4,500, as the casino is not required to take anything from that.