New Bill Could Clear Up Israeli Poker Tax IssuesLikund Party’s Sharren Haskel Introduced The Bill to the Knesset In Early November |
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The tax rate for Israeli poker players could soon be clarified following years of uncertainty, disputes and six-figure bills for some of the country’s top players. Heading into 2019, Israeli ministers will be considering a new bill introduced by the Likund Party’s Sharren Haskel. Aiming to define the status of poker and, in turn, an applicable tax rate, Haskel introduced a bill to the Knesset at the start of November. Although this isn’t the first time poker supporters have pushed to have the game legalized, the latest effort comes in the wake of a recent ruling by Supreme Court Judge Neal Hendel.
“The fact that the players go to contests and tournaments year after year strengthens the conclusion that it is not a game of luck,” Hendel said in a court recent ruling.
Defining Poker as a Skill
Should Haskel’s bill be successful, it would redefine poker as a skill game and, in turn, offer some guidance for the Finance Ministry. Over the last five years, many of Israel’s top poker players have been locked in a dispute over tax payments. By reviewing tournament results from databases such as The Hendon Mob and the Global Poker Index, the Israeli Tax Authority has taken aim at Uri Miller and Rafi Amit. Tracking Miller’s results via the Hendon Mob’s database, tax inspectors have claimed that he is liable for 50% tax on the $280,000+ he won during 2010. For Amit, who has in excess of $900,000 in live earnings, the taxman demanded $650,000 in payments for his 2007 haul.
Contesting the charges, the players have argued that public tournament databases don’t take into account things such as expenses, casino fees and staking agreements. Indeed, when breaking down his 2007 earnings, Amit showed that his $650,000 in prize money actually equated to $370,000 in take-home pay. Despite the arguments, the tax authority has continued to push for 50% of the poker player’s earnings, calling them a business income. Given the current status of the game (i.e. a form of gambling), players have opted to base their payments on a lower rate. Indeed, when an Israeli plays casino games, their winnings are subject to a 35% tax under the lotteries, prizes, and gambling rate.
If Poker is a Business, Buy-Ins Should be Expenses
In contrast to those in UK, that’s high. Indeed, UK gamers can play at some of the best casino sites and not pay a dime in tax. However, even at 35%, the rate is still better than the 50% players such as Amit have been forced to pay.
What will be interesting to see in the coming months is how Haskel’s bill will affect the tax rate. Although nothing has been confirmed, there is a chance the government would use the skill game definition to class poker as a business. In practice, that would set the levy at 50%. However, if poker is formally classed as a business venture, it would open up the possibility of deducting expenses. In theory, this would include travel expenses, fees, staking arrangements and losses.
The last point would be the most crucial as tournament buy-ins aren’t taken into account when recording a player’s live results. For example, a player could win $100,000 at the World Series of Poker (WSOP) but spend $65,000 on buy-ins. If poker is classed as a business, this amount should be taken as a legitimate investment and, therefore, a deductible expense. Whether or not the Israeli Tax Authority agrees with such arguments will be a matter for debate. Indeed, if a new law is going to be passed, these sorts of details will have to qualified. However, for poker players in Israeli, there does seem to be some sort of light at the end of the tax tunnel.
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