Expert: Chris - 2/3/2007

Question
ok, well... ive been doing well on online poker.. Should I be paying taxes?? you say that its like being a drug dealer paying taxes and how that wouldnt make sense... how would you file then??   I would rather not file if there was a chance of getting in trouble for online poker.. U know? well, thank you so much for your time and knowledge.. I really appreciate it.
-------------------------------------------
The text above is a follow-up to ...

-----Question-----
Hi, I live in Minnesota.. I heard it was illegal to gamble online in Minnesota?? I know still many people doing this in Minnesota.. Is this true?? Would I get in trouble?? also , do i have to pay taxes for my winnings?? lastly, is there somme kind of agency where i could file against about some complaints about a online site?? thank you so much for your help
-----Answer-----
So far in Minnesota, online poker does not appear to be illegal. There is no federal law dealing with poker specifically, and while the DoJ tries to lump poker in with activities like sports betting, they have yet to put that assumption ot the test by prosecuting someone for online poker.

I'm not a lawyer, so I can't really offer you solid legal advice, but I'm still playing every day and having no problems. It's possible that you could get in trouble, but at this point that possibility is very very low, and certainly not something I am worried about at this point.

You should pay taxes on all your winnings (I do) but frankly the government may not allow you to do so. By the end of the year it may be illegal to play, and it will be like asking a drug dealer to pay taxes. They just can't do it. You can offest your winnings with your losses as long as you keep records, and there are a few good books on gambling and taxes at twoplustwo.com in their online catalog.

If you want to file a complaint about a site, you shoudl expect nothing to be done about it. The only thing the sites are afraid of is losing business, so complaining on large public poker forums, with a very good representation of yourself and your complaint (don't be a dick)is usually the best way to get their attention if customer service people won't help you.

Getting a rememdy from the site will only happen by being firm but not angry at the customer service people and explaining the situation. Tell them you are not interested in playing on the site if they cannot remedy the situation. If that doesn't help then dont play there any more and try out Bodog or Full Tilt, both of whom have an excellent record on customer service issues.

Answer
It is definitely much worse to cheat on your taxes than it is to play online poker, and you are best off paying those taxes for now. At some point the government may decide that we are really all too stupid to have access to poker without supervision, and they may make the whole thing illegal.

If that happens then you'll be in a real quandary about what to do with taxes, but you'll be making income from something illegal, much like a drug dealer. As far as I know they don't pay taxes, and the government misses out on billions of dollars in taxes, just like they do in the online gambling industry.

For now, pay your taxes. It's very bad to be caught with unreported income, and online poker isn't even illegal in Minnesota at this point, so you have no reason not to file.