Could UK Poker Winnings be Taxed?

Could UK Poker Winnings be Taxed?

Friday, 27 March 2015

The bankrolls of winning poker players in the UK could be set for a knock if the government decides to take not of a new study into the skill aspect of the game. For years now poker has fallen under the umbrella of gambling and that's allowed players to enjoy tax free winnings. However, there could be a change on the horizon if Dr Dennie van Dolder is to be believed.

Working with a team of researchers at the University of Nottingham's School of Economics, Dolder found that skilled poker players do in fact win more money than unskilled players over time. Analysing a database of 456 million hands, the study found that players with more experience showed a greater likelihood of winning than those with less experience.

Sharing data and findings with the Erasmus University Rotterdam and VU University Amsterdam, the team found that a player that finished in the top 1% of winners in the first half of the year was 12X more likely to repeat the feat in the second half of the year compared to a less skilled player.

Moreover, the magical number that needs to hit before a player's skill edge shines through appears to be 1.471. During the research, the analysts noticed that a player's success rate was only slightly better than a non-skilled player in the short term. However, the gap between success and failure gradually increased until 1,471 hands had been played at which point the skilled grinder would perform 75% better.

The findings of the study fly in the face of previous research in Europe which suggested that online poker was a game based purely on luck. In 2012 Professor Gerhard Meyer studied 300 poker players playing 60 hands each at the University of Bremen. After dividing the participants into "expert" and "average" players, he found that the former lost less money on bad hands but didn't win any more with good hands.

In commenting on the latest findings, Dolder suggested that the British government may decide to use the study as justification for taxing poker players.

"It's up to legislators to decide whether the role of chance diminishes fast enough for poker to be considered a game of skill. If so then our findings represent both good and bad news for players.

'The good news is they'll have the satisfaction of knowing the game they love is recognised as requiring real skill. The bad news is that one day they might have to start handing some of their winnings to the taxman if the policymaking community takes notice of findings like ours."

Fortunately, there has been no official word on this matter and while it's nice to have validation that poker is a game of skill, it seems the process of taxing poker players above any other gambler in the UK would be a complicated process.

Tags: University, luck vs. skill