Jonathan Duhamel is among the world’s most successful poker players, with more than $18 million in live tournament earnings and three World Series of Poker (WSOP) titles under his belt. He spent the last ten years accumulating winnings and building a name for himself in the tournament circuit, but right now, he might have to take a step back from the game to focus on a potential legal battle arising from a tax dispute with the Canadian government.
The Canada Revenue Agency (CRA) claims that Duhamel needs to pay more than CA$1.2 million in tax liabilities stemming from his poker activities during the period 2010-2012. This could double to more than CA$2 million if Quebec’s tax agency joins in.
Winnings from games of chance, including poker, are generally non-taxable in Canada, but if the winnings are part of a business, they are subject to taxation.
Authorities argue that Duhamel ran a business between 2010 and 2012 and therefore liable for CA$1,219,114 in back taxes. That period covers the year (2010) when he won his first WSOP bracelet for $8.9 million.
CRA Considers Duhamel’s Poker Playing As Business
The CRA said Duhamel’s poker dealings during those three years clearly constituted a business for the following reasons:
Duhamel took the game seriously, playing at least 40 hours a week, with no other source of income apart from being a professional poker player; He spent a significant amount of money ($4.1 million) in piece swaps during his 2010 WSOP Main Event victory to minimize his risk of losses. Those swap agreements are taxable.
In 2011, PokerStars signed him as brand ambassador under a $1 million contract, $480,000 of that was given to him in cash, while the remaining amount accounted for tournament expenses.
The agency concludes that Duhamel’s poker winnings came as a result of skill and talent, and not by chance, but the Canadian poker pro disputes this.
Duhamel Maintains Poker Success Is Due To Luck
Duhamel said he did not have any specific training in poker, and therefore his long-term success is mostly driven by luck. He also said that his “professional poker player” label was mainly intended for marketing while he was still a member of Team PokerStars Pro.
Should the case advance to the courts in March 2021, Duhamel’s attorney plans to focus on the case of two recreational Canadian gamblers, Brian and Terry Leblanc, who ultimately won a legal battle against the CRA over their massive winnings in sports lotteries.
Despite the CRA case being strong, the Tax Court of Canada ultimately ruled in favor of the Leblanc brothers, in what is widely considered a landmark decision on the issue of taxing gambling winnings in the country.
But it won’t be an easy task for Duhamel’s legal team, as it a known fact that a lot of Canadian poker pros, including the elites, have distanced themselves from major US-based tournaments like the WSOP to avoid huge tax liabilities. Therefore, many pros actually accept that their winnings could actually be subject to tax.
Some Key Points Still Need Clarity
Questions still need to be answered though as to why the CRA is only targeting Duhamel’s poker winnings from 2010-2012 when he continued to win big in many tournaments in the years that followed. From 2013-2015, Duhamel was able to amass around $6.5 million.
In 2015, he captured his second WSOP bracelet after winning the $111,111 High Roller for ONE Drop for almost $4 million. He followed it up with another victory in the €25,600 High Roller No-Limit Hold’em at the 2015 WSOP Europe where he won more than €500,000. Duhamel also continued his stint with PokerStars until 2015.
The incomes presented by the CRA also do not quite match with Duhamel’s earnings record from the Hendon Mob, though it maybe because of sponsorship agreements and differences in exchange rates.