Last night, the Main Event of the World Series of Poker concluded. (While there are still a few events to be decided in the WSOP, this is the event that everyone thinks of as the big one.) Before I get to the winners (and the tax impacts), I want to give some credit to Caesars Entertainment. Generally, the WSOP ran without hitches. There were worries about Covid (especially given the past history of the Rio Hotel and Casino), but until this week that was basically a non-issue.
The Main Event attracted 6,650 entrants, each ponying up $10,000. The prize pool was $62,011,250 (the difference is the funds kept by Caesars for running the event). We focus on the final table of nine, but in actuality 1,000 of the 6,650 received winnings from the prize pool; a minimum cash was worth $15,000. The winner received a cool $8 million…but that’s before taxes.
One important note: I do need to point out that many of the players in the tournament were “backed.” Poker tournaments have a high variance (luck factor). Thus, many tournament players sell portions of their action to investors to lower their risk (and/or “swap” action with other entrants). It is quite likely that most (if not all) of the winners were backed (or had swaps) and will, in the end, only enjoy a portion of their winnings. I ignore backing and swaps in this analysis (because the full details are rarely publicized). Now, on to the winners.
Congratulations to Koray Aldemir, a native of Berlin, Germany who currently resides in Vienna, Austria. On the final hand, Mr. Aldemir flopped top two pair (holding 10-7 in his hand). George Holmes, who finished in second place, had a King in his hand. That was disastrous for Mr. Holmes when a King appeared on the turn. The remaining money went in on the final card (the ‘river’) which didn’t change the result. Mr. Adlemir, a professional poker player who is a regular on the high stakes circuit, benefits from the US-Austria Tax Treaty (his income is exempt from withholding by the IRS). And there’s a taxing reason why Mr. Aldemir moved from Germany to Austria: Austria does not tax gambling income of its residents. It sure beats the 46% tax rate he’d be facing if he was residing in Germany.
Finishing second place and winning $4,300,000 was (as previously noted) George Holmes. Mr. Holmes, a resident of Atlanta, is an amateur gambler who mainly plays cash games though he plays the Main Event every year. I estimate he’ll owe $1,802,011 in tax to the IRS and Georgia leaving him with just under $2,500,000 of his winnings to enjoy.
In third place was Jack Oliver. The resident of Manchester in the United Kingdom benefits from both the US-United Kingdom Tax Treaty (gambling winnings are exempt from withholding) and UK law on gambling: His winnings are not subject to tax in the UK. He gets to keep all $3 million of his winnings. It’s always nice when your after-tax income legally equals your before-tax income!
Joshua Remitio of Gilbert, Arizona (suburban Phoenix) finished in fourth place winning $2,300,000. Mr. Remitio previously had entered poker tournaments with a maximum buy-in of $300; by far, he was the individual who came out of nowhere. Arizona is luckily not a high-tax state; I estimate he’ll owe $1,004,393 in tax to the IRS & Arizona and be able to keep $1,295,607 of his winnings.
Finishing in fifth place was Ozgur Secilmis, of Istanbul, Turkey. The US-Turkey tax treaty exempts his winnings from US withholding. Turkey, like the United States, taxes the worldwide income of its residents. Also like the United States, Turkey has a graduated income tax. The top tax bracket (40%) begins at 650,000 TRY (Turkish Lira); the Turkish Lira today is worth $0.09. I estimate Mr. Secilmis will owe 7,773,055 TRY (or $699,575) to the Turkish Revenue Administration.
The sixth place winner, Hye Park of Holmdel, New Jersey, is a professional poker player who normally plays cash games. But his foray into the Main Event sure paid off: sixth place paid $1,400,000. Unfortunately, New Jersey is not a low tax state (plus as a professional gambler Mr. Park must pay self-employment tax). I estimate he’ll owe just over $650,000 in tax and get to keep just $749,709 of his winnings. Mr. Park owes the highest percentage in tax (an estimated 46.45%) of any of the final table finishers.
Alejandro “Papo” Lococo of Buenos Aires, Argentina is an MC and also an ambassador for PokerStars (an online poker site). Finishing seventh earned Mr. Lococo $1,225,000 but that’s before taxes. The US and Argentina do not have a tax treaty, so 30% of his winnings are withheld to the IRS. He’ll be able to take a tax credit on his Argentina tax return for the tax withheld to the IRS; that will lower the tax paid to Argentina to an estimated 5% of his winnings ($61,250) and he overall pays $428,750 in tax. His net winnings are $796,250.
In eighth place was Jareth East of Redhill, England won $1,100,000 for his eighth place finish. A professional poker player, his winnings are not subject to US tax nor does the United Kingdom currently tax gambling. Yes, Mr. East gets to keep all $1,100,000 of his winnings.
The ninth place finisher was Chase Bianchi. Mr. Bianchi is a former professional gambler (he is now a software engineer), so he won’t owe self-employment tax. Still, as a resident of Massachusetts he will pay an estimated 37.56% of his winnings in taxes to the IRS and Massachusetts leaving him estimated after-tax winnings of $624,357.
Here’s a table summarizing the tax bite:
| Amount won at Final Table | $24,125,000 |
| Tax to IRS | $3,676,973 |
| Tax to Turkey Revenue Administration | $699,575 |
| Tax to Georgia Department of Revenue | $247,250 |
| Tax to New Jersey Division of Taxation | $122,671 |
| Tax To Arizona Department of Revenue | $102,944 |
| Tax to Administracion Federal de Ingresos Publica (Argentina) | $61,250 |
| Tax to Massachusetts Department of Revenue | $50.000 |
| Total Tax | $4,960,663 |
That means 20.56% of the winnings at the final table goes toward taxes.
Here’s a second table with the winners sorted by their estimated take-home winnings:
| Winner | Before-Tax Prize | After-Tax Prize |
| 1. Koray Aldemir | $8,000,000 | $8,000,000 |
| 3. Jack Oliver | $3,000,000 | $3,000,000 |
| 2. George Holmes | $4,300,000 | $2,497,989 |
| 4. Joshua Remitio | $2,300,000 | $1,295,607 |
| 5. Ozgur Secilmis | $1,800,000 | $1,100,425 |
| 8. Jareth East | $1,100,000 | $1,100,000 |
| 7. Alejandro Lococo | $1,225,000 | $796,250 |
| 6. Hye Park | $1,400,000 | $749,709 |
| 9. Chase Bianchi | $1,000,000 | $624,357 |
| Totals | $24,125,000 | $19,164,337 |
The players from the United Kingdom did better than their results with Mr. Oliver finishing in second place and Mr. East finishing in 6th place based on after-tax winnings. Mr. Park fell to eighth place (from sixth) because of taxes.
The Internal Revenue Service did not end up with taxes that exceeded the first place winnings; the agency will have to be content with finishing in third place (based on pre-tax prizes). With three winners exempt from US taxation, the IRS didn’t rack in its usual haul. Indeed, the tax agencies ended up exceeding only second place money this year due to those three individuals also being exempt from taxes in their home countries. Still, you can’t say that the IRS didn’t do poorly because the house always wins.
Tags: WSOP