Alleged poker-pro Jonathan Duhamel is in big trouble with the Canadian fisc. He might owe as much as $1.2 million in back taxes for his 2010 win at the WSOP Main Event. And on his poker profits for the rest of that year and the two following.
The case hinges on whether or not Jonathan Duhamel is a professional poker player.
The argument stems from a tax court ruling in 2006 in which Chief Justice Donald Bowman ruled that two gamblers who won millions betting on sports were not liable for tax on their winnings. However, in the same ruling, Bowman added that if they were running a business, the income would be taxable.
Precedent set. Cue arguments.
The upshot is that gambling income goes untaxed in Canada. Instead, the taxman gets his cut at the casino’s end.
This is similar to places like the U.K. But unlike the U.K., if a player is making money consistently in Canada, they are considered to be running a business and are on the hook for tax in the way any sole trader would be.
Here’s a clip of Duhamel skillfully winning a hand back in 2010:
🇨🇦🇨🇦🇨🇦 Oh Canada! 🇨🇦🇨🇦🇨🇦
— PokerGO (@PokerGO) April 26, 2020
The Duhamel bluff
So Duhamel is in the strange situation of having to argue against the skill element in the game that he’s won at least $18 million dollars at.
His arguments are, broadly, that:
- his WSOP windfall of $8.9 million was the product of wild luck,
- he hasn’t ever been given poker training,
- there is no system in his arsenal that allowed him to overcome chance in tournament poker, and
- he refers to himself as a “professional poker player” purely for marketing reasons.
This comes as a slap in the face to the poker advocates who have been arguing with legislators on every continent except Antarctica that poker is a skill game. And that as such, it shouldn’t be banned under anti-gambling laws.
At least one person on Twitter viewed Duhamel’s arguments as a stretch, writing that they “haven’t seen a bluff this bad since 2010.”
It could be a while before the haters stop crowing over this one.
— Collin Capone (@PokerCapone) October 28, 2020
The court’s case
The case being made by the Canadian Revenue Agency is that:
- Duhamel “behaves like a serious businessman” at the table;
- has had one job since 2008 — that of playing poker;
- puts in 40 to 50 hours per week at the felt,
- multi-tables to increase his profits,
- has an agent and sponsors;
- implements mathematical strategies at the table, and business strategies —like swapping action as a hedge against variance — when he is away from the tables; and
- he calls himself a professional poker player.
In some ways, the argument is the old one of how many grains of sand make a pile. The line between problem gambler and poker pro falls on a sliding scale and someone has to draw the line somewhere.
The tax court has made it clear that their interest is not in “Sunday gamers” who earn a few bucks here and there. And consistent losers shouldn’t be on the hook even if they hit the occasional windfall.
But while Duhamel might feel like a cut and dried pro, it’s not clear where this case would leave a semi-pro. If the ruling goes against Duhamel, the fight may have to happen again and again at lower and lower stakes before anything definitive is worked out.
Featured image source: Flickr