This year’s main event of the World Series of Poker (WSOP) attracted 9,735 entrants each of whom paid $10,000 attempting to become the World Champion. This wasn’t a record (last year’s field had 10,112), but it was still the third largest. The winner would receive a cool $10 million. How much of it did he actually get to keep (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 “The Grinder,” Michael Mizrachi of Miramar, Florida (near Miami). Not only did he thoroughly dominate the final table, he had earlier won what is probably the most difficult event at the WSOP, the $50,000 Poker Player’s Championship. That event features almost all professional poker players proficient in multiple poker variants. (Mr. Mizrachi has now won the Poker Player’s Championship four times!) Yesterday, on the final hand he made a flush with his ten-three of clubs; his opponent, John Wasnock, had two pair and did not improve on the final card. As a resident of Florida, he doesn’t have to worry about state income tax (the first of many instances of zero being great in tax). He does have to pay both US income tax and self-employment tax; I estimate he will pay $3,967,255 leaving him with $6,032,745.
In second place is John Wasnock, an investment consultant from North Bend, Washington. Per the Hendon Mob database, he had previously earned just $143,643 in poker tournaments; he definitely added to that with his $6,000,000 second place prize. Washington state doesn’t have an income tax; he’s also not a professional gambler so he doesn’t have to deal with self-employment tax on his winnings. I estimate he will pay $2,209,894 in tax (and keep $3,790,106).
Braxton Dunaway of Midland, Texas finished third. He works in the petroleum industry and also happens to be an accomplished amateur poker player. Texas is another state which doesn’t have an income tax. Like Mr. Wasnock, he also avoids self-employment tax. I estimate he’ll keep $2,524,527 of his $4 million third place prize (paying $1,475,473 in tax).
Kenny Hallaert, originally from Belgium but now residing in London, England, finished in fourth place. Mr. Hallaert is a well-know player and poker tournament director; he’s also known for annually putting together a spreadsheet of all the poker tournaments running in Las Vegas during the summer. This is the second time he’s made the final table of the Main Event (he finished sixth in 2016). This year he earned $3 million. The US tax treaty with the United Kingdom exempts gambling winnings (so the IRS gets nothing). Additionally, the United Kingdom doesn’t tax gambling winnings. It’s always good when your after-tax income is equal to your pre-tax income.
Luka Bojovic of Vienna, Austria (originally from Serbia) came in fifth place for $2,400,000. The professional poker player (who is also a doctor) was nearly completely “card-dead” on Tuesday (during the first day of the final table of the Main Event) and did an excellent job to finish fifth. The US-Austria Tax Treaty also exempts gambling winnings, and Austria is another country that doesn’t tax gambling. Thus, Mr. Bojovic is another individual who gets to keep all of his winnings.
Adam Hendrix, a professional poker player residing here in Las Vegas, ended in sixth place earning $1,900,000. An accomplished professional, his Main Event finish moved his career earnings over $10 million. I estimate that Mr. Hendrix will owe $698,000 in tax (just under 37%).
Leo Margets was the first woman to make the final table in 30 years (the last was Barbara Enright who finished fifth in 1995). Most of the poker world was hoping that she could find a way to win; however, the poker professional from Barcelona, Spain fell in a hand against Kenny Hallaert. Ms. Margets had ace-ten against Mr. Hallaert’s pair of sixes. On the turn (the fourth board card), Ms. Margets paired her ace but it gave Mr. Hallaert a flush draw. The river card (the final card) gave Mr. Hallaert the flush, and ended Ms. Margets’ run. She did earn $1,500,000 and the IRS gets none of it (the US-Spain tax treaty exempts gambling). However, Spain is not a low-tax country; Ms. Margets is lookin gat losing 47% of her winnings to tax ($705,000) and will keep an estimated $795,000.
Jarod Minghini, a professional poker player from Lake Tahoe, Nevada, ended up in eighth place earning $1,250,000 before taxes. This is, by far, Mr. Minghini’s largest cash of his career. Like the other American professional gamblers, he does have to pay self-employment tax along with income tax. However, like Mr. Hendrix, Mr. Minghini resides in Nevada, another state with no income tax. I estimate he will pay 38.52% of his winnings in tax ($481,553) for an after-tax prize of $768,447.
Daehyung Lee is the first South Korean to make the WSOP Main Event final table; he finished ninth for $1 million. The US-South Korea Tax Treaty does not cover gambling; thus, $300,000 of his winnings will be withheld by the IRS. South Korea has marginal tax rates from 6% to 45%, plus residents must pay a 10% local tax (a surtax). I estimate Mr. Lee will lose $517,212 (over half his winnings) in tax. His tax in Korea will be $517,212 but he should be able to claim a foreign tax credit on his US withholding of $300,000.
Here’s a table summarizing the tax bite:
| Amount won at Final Table |
$31,250,000 |
| Tax to IRS |
9,132,175 |
| Tax to Agencia Tributeria (Spain) |
$705,000 |
| Tax to National Tax Service (S. Korea) |
$217,212 |
| Total Tax |
$10,054,387 |
That means 32.38% 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. Michael Mizrachi |
$10,000,000 |
$6,032,745 |
| 2. John Wasnock |
$6,000,000 |
$3,790,106 |
| 4. Kenny Hallaert |
$3,000,000 |
$3,000,000 |
| 3. Braxton Dunaway |
$4,000,000 |
$2,524,527 |
| 5. Luka Bojovic |
$2,400,000 |
$2,400,000 |
| 6. Adam Hendrix |
$1,900,000 |
$1,202,000 |
| 7. Leo Margets |
$1,500,000 |
$795,000 |
| 8. Jarod Minghini |
$1,250,000 |
$768,447 |
| 9. Daehyung Lee |
$1,000,000 |
$482,788 |
| Totals |
$31,050,000 |
$20,995,613 |
Once again, a player ended up placing higher than his actual finish based on after-tax results. This year, Mr. Hallaert finished in third place based on after-tax winnings; additionally, Mr. Bojovic just missed finishing in fourth place based on after-tax income. Zero percent tax rates absolutely have influenced where both individuals now reside.
One loser this year were state income tax agencies. None of the Americans making the final table owe state income tax because they all reside in a state with no income tax (Florida, Washington, Texas, and Nevada). Yes, Washington state has every other tax known to man (besides an income tax) and both Florida and Texas have relatively high property tax rates. Still, zero percent is quite desirable in tax.
This was another year where the Internal Revenue Service missed out on earning more at the final table than first place with just $9,132,175. Still, you can’t say that the IRS didn’t do poorly because the house always wins.