Canada Revenue Agency won't appeal loss in back-taxes case against Jonathan Duhamel

Haley Hintze Author Photo
Haley Hintze
Posted on: September 6, 2022 22:03 PDT

2010 World Series of Poker Main Event winner Jonathan Duhamel has emerged victorious from a four-year back-taxes battle against the Canada Revenue Agency (CRA) over years of poker tournament winnings. As reported by Montreal's La Presse, the CRA will not appeal the June ruling in which his winnings were found to have been achieved by a preponderance of luck rather than skill, and thus not taxable under Canadian law.

La Presse reported on Tuesday that Duhamel's tax attorney had received confirmation from the CRA that the agency would drop the matter, despite having until September 21 to consider filing an appeal. The CRA had sought roughly CAD $1.2 million from Duhamel for his success in two major poker events -- the 2010 WSOP Main Event win, where he collected nearly US $9 million, and the 2015 WSOP High Roller for One Drop, where he earned another $4 million.

However, the two big scores stood in contrast to the rest of his tournament career, where he otherwise posted a net loss of more than a million dollars from 2010 to 2018. Duhamel has dropped off the tournament scene in recent years.

"Mr. Duhamel's poker game activities do not demonstrate an ability to generate profits, [...] the probability of ruin [...] is much greater than 50 %, Mr. Duhamel does not act like a man of Serious affairs as part of his poker game activities, [and he] has not developed any risk management or attenuation system in the context of his poker game activities," wrote Judge Dominique Lafleur in her ruling favoring Duhamel.

Tax professor says CRA wise to drop matter

Canadian tax-law specialist André Lareau commented on the circumstances of the case to La Presse following the disclosure that the CRA planned to forego an appeal. According to Lareau, a professor of tax law at Laval University, not only did the CRA fail to convince the tax court that Duhamel's big paydays were more due to skill than luck, the possibility of injecting the "skill" argument into a case of this nature might also open the flip side of the equation, thus allowing losing players to possibly claim a skill-based loss writeoff they are presently not entitled to under Canadian law.

Since losing players far outnumber winners, Lareau argued, that could, over time, represent a sigificant overall loss in tax revenue to Canada from activities related to poker and gambling.

Canada and many other countries consider poker a game of chance for tax purposes and do not tax winnings from the game. These countries stand in stark contrast to the United States, where profits from poker and other gambling forms are considered taxable income.

Featured image source:  WPT , used under a  CC license .