ChipMeUp was the first online Poker Staking website created back in 2007 and we are very excited to recently celebrate our 10th birthday! We've seen many other staking sites come and go over the years, but ChipMeUp has survived them all. Poker internet sites are number places for rudeness or gross talking. Subsequent these simple tips will make sure that you have the most effective poker sport possible and that have fun while enjoying poker gambling games. Poker gaming is a thrilling new hobby that lots of individuals of all ages have began recently. Stake = a poker agreement where one party (the Staker) agrees to fund another (the Stakee) to play, in return for a share of any profits Staker = person giving out the stake Stakee = person receiving the stake Horse = the horse is another name for the Stakee ITM = In The Money TPS = Total Profit for Staker STR = Expected Value in percentage terms.
In poker terms, a staking arrangement arises when one gives money to a another player to engage in gambling activity with the money. Staking is often seen in tournament play. Nick Marchington, a young British poker professional, has been sued by two principals of a poker-staking operation who believe they are entitled to 10% of Marchington's US$1,525,000 payday. Marchington, 21, of Hornchurch, England, had a chance to become the youngest-ever winner of the World Series of Poker's 2019 $10m Main Event before.
In poker terms, a staking arrangement arises when one gives money to a another player to engage in gambling activity with the money. Staking is often seen in tournament play. A common arrangement is a 'staker' (or backer) contributing 100% of the entry fee, and is entitled to 50% of whatever winnings the 'stakee' (or player) wins, if any, in excess of the entry fee.
Assuming for the moment both the staker and stakee are US residents, we have straightforward tax consequences of the staking activity. Suppose I am staked for the 2012 World Series of Poker Main Event, which begins later this year on July 7 at the Rio All-Suite Hotel & Casino in Las Vegas. The entry fee is $10,000. There are two possible outcomes: (1) I win nothing or (2) I place and win some money.
If I win nothing, my backer has a $10,000 gambling loss and I have no tax consequences. If I place and win $100,000, for example, my backer and I each have $45,000 of gambling winnings from the tournament ($100,000 less $10,000 entry fee then divided in half).
A casino is required to issue a Form W-2G to a US resident who wins more than $5,000 in a poker tournament. The W-2G is also sent to the IRS. Applied to the example, I receive a W-2G for $90,000. Problem is, the IRS believes I won $90,000, when I actually only won $45,000 because half of the winnings are attributable to the staker. I don't want to pay tax on income that isn't mine.
What can I do? There's good news and bad news.
Takeaway #1: Player and staker may submit to the casino Form 5754 so the casino can appropriate the winnings between player and staker.
The good news: In the example above, I would complete with my backer Form 5754, Statement by Person(s) Receiving Gambling Winnings. When I go to receive the $100,000, I would provide the casino the form. The casino should then prepare two Form W-2Gs: One for me and one for my backer, both reflecting $45,000 of gambling winnings.
Notice I italicized 'should.' Now the bad news.
Takeaway #2: The World Series of Poker has not recognized partnerships, and has not accepted Form 5754.
In my example, one Form W-2G would be issued to me for $90,000 even though I completed with my backer a Form 5754. As a result, the IRS would believe I have $90,000 income and my staker has no income from the tournament.
There are some possible accounting methods one may implement in order to produce proper allocation of the winnings. There is no 'one size fits all' approach, however, because professionals and amateurs are treated differently for tax purposes. Be sure to consult your own tax professional to discuss these options.
To this point we have assumed both the player and staker are US residents. Do the tax consequences change at all if the player or staker are not residents of the US?
Yes. Before delving into the issues, some background discussion is necessary.
Takeaway #3: In general, US gambling winnings paid to foreign individuals are subject to 30% withholding for federal income tax, assuming the income is not effectively connected with a US trade or business and is not exempted by treaty.
For example, if a resident of Canada enters New York State and gambles at one of the Tribal casinos in the state, the player's winnings are subject to 30% withholding.
Exception: No tax is imposed on nonbusiness gambling income a nonresident wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the US. So, a Canadian resident who only plays blackjack at a Tribal casino in New York State will not be subject to US income tax on those gambling winnings, if any.
Now let's talk about tax treaties. An applicable tax treaty between the US and a treaty partner may reduce the amount withheld by a US casino. US gambling winnings earned by residents of the following foreign countries is not taxable in the US:
Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukranie, and the United Kingdom.
Claimants must provide the casino a Form W-8BEN (with a TIN) to claim treay benefits on gambling income that is not effectively connected with a US trade or business. Sometimes a payer may accept a W-8BEN without a TIN. If the income is effectively connected with a US trade or business, claimants must provide a Form W-8ECI to claim treaty benefits.
Let's go back to our Canadian resident, and let's call him Stu. Suppose in 2011, Stu won $10,000 in a poker tournament held at a Tribal casino in New York State. The casino is required to withhold $3,000 (30% of $10,000) and issue to Stu a Form 1042-S, Foreign Person's US Source Income Subject to Withholding.
For income paid in 2011 subject to 1042-S withholding, the casino is required to file Form 1042, Annual Withholding Tax Return for US Source Income of Foreign Persons and Form 1042-S with the IRS no later than March 15, 2012. Penalties may be imposed if either requirement is not satisfied.
Takeaway #4: When staking activity involves US nonresidents, Form 1042 and Form 1042-S filing requirements may apply not only to casinos but also to the recipients of the winnings.
How? Back to the original facts. Assume the player wins $100,000, $10,000 of which is a recovery of the entry fee. $45,000 is attributable to both the player and the backer. There are three scenarios to consider:
1. US stakee, nonresident staker
Poker Staking Contract Template
Here, the US resident receives the full $100,000, along with a Form W-2G reflecting $90,000 of gambling winnings. The staker then receives his share from the stakee, but not the full $45,000.
Why? Because US gambling winnings paid to nonresidents are subject to 30% withholding, the stakee withholds $13,500 (30% of $45,000) of the winnings. The stakee then completes a Form 1042-S and issues a copy to the staker, files a Form 1042 by March 15 of the following tax year, and deposits the $13,500 with the US Treasury within a certain timeframe.
Note the stakee is issued W-2G reflecting $90,000 of gambling winnings, half of which aren't his. Again, consult a tax professional to discuss options on how to handle this situation for reporting purposes.
2. Nonresident stakee, US staker
Here, we reverse the roles. The casino withholds 30% of the $90,000, pays the stakee $73,000 (70% of $90,000 plus $10,000 entry fee), and issues to the stakee a Form 1042-S reflecting amounts won and withheld.
The US staker is entitled to $55,000 ($10,000 entry fee plus $45,000 winnings). When the stakee pays this amount, then the stakee is left with only $18,000 cash in hand. Why so little? The 30% withholding imposed by the casino should have applied to only half of the $90,000, but it applied to the full $90,000.
After the close of the tax year, the stakee may file a Form 1040-NR, US Nonresident Alien Income Tax Return to reflect amounts paid and owed. Depending on the taxpayer's other activity during the year, he may receive a refund from the overpayment of tax from the staking activity.
3. Nonresident stakee, nonresident staker
In this last scenario, the consequences are the same as those under (2), except the stakee must withhold 30% of the staker's winnings, and pays the staker the $10,000 entry fee plus $31,500 of winnings after withholding. Filing and depositing requirements apply to the stakee, as described in (1).
As you can see, staking activity can create some tricky tax situations. I haven't heard whether the World Series of Poker will change its policy regarding partnerships for 2012. For now, we have to operate under the assumption that it won't.
Author's note: I must remind all readers that it is impossible to offer comprehensive tax advice on the internet. Information I write on this blog is not legal advice, and is not intended to address anyone's particular tax situation. Should you seek such advice, consult with a tax professional to discuss your facts and circumstances.
IRS Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, I inform you that any US federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.
Playing money for poker fans is also a great relief for the emotions of the players. It certainly helps them to play more calmly and switch less, so they can play their game A much longer. Often, thanks to staking poker, you can also try games in a new poker room, a new poker variant and new risk-free bets. Choosing these experiences would be much more difficult if they were playing with their own money. Assuming you have already sold yourself to the fans by listing your past results and the terms of the current bet you are proposing, there are a number of things you need to consider when issuing the final receipt agreement. Writing a copy is not just a matter of 'I`m going to play x and y events, and my support gets 50% more winnings plus makeup.' If Will supports Steve in a 50/50 deal with 100% makeup for $5,000 buy-ins at the World Series of Poker, and takes Steve for $8,000, most people think they`ll both get $4,000; Well, that`s certainly not the case. When it comes to taking players or looking for a picket, there are many things you need to know, but even if you know who, when, how, how, what and why to cash it, there is still a piece of the puzzle missing; Where? Just because a player is a financial commitment doesn`t mean he`s a bad poker player, or even not trustworthy (i.e. you should be a little more careful if that`s why a player is looking for supports) and many of these players are often the best values in the world of staking. Life happens to everyone, and from time to time, everyone needs help. Stakeback has become one of the most common terms in the world of staking and is very similar to makeup with only a few small differences. In this topic, I`ll go on the ins and outs of the stakeback and everything you need to know about Stakeback as a player and as a supporter. A bankroll usually refers to the amount of money set aside to play poker. In the staking world, a bankroll is what a player wants to scratch, while for fans, it usually refers to the amount of money they have set aside to invest in players.
Takeaway #1: Player and staker may submit to the casino Form 5754 so the casino can appropriate the winnings between player and staker.
The good news: In the example above, I would complete with my backer Form 5754, Statement by Person(s) Receiving Gambling Winnings. When I go to receive the $100,000, I would provide the casino the form. The casino should then prepare two Form W-2Gs: One for me and one for my backer, both reflecting $45,000 of gambling winnings.
Notice I italicized 'should.' Now the bad news.
Takeaway #2: The World Series of Poker has not recognized partnerships, and has not accepted Form 5754.
In my example, one Form W-2G would be issued to me for $90,000 even though I completed with my backer a Form 5754. As a result, the IRS would believe I have $90,000 income and my staker has no income from the tournament.
There are some possible accounting methods one may implement in order to produce proper allocation of the winnings. There is no 'one size fits all' approach, however, because professionals and amateurs are treated differently for tax purposes. Be sure to consult your own tax professional to discuss these options.
To this point we have assumed both the player and staker are US residents. Do the tax consequences change at all if the player or staker are not residents of the US?
Yes. Before delving into the issues, some background discussion is necessary.
Takeaway #3: In general, US gambling winnings paid to foreign individuals are subject to 30% withholding for federal income tax, assuming the income is not effectively connected with a US trade or business and is not exempted by treaty.
For example, if a resident of Canada enters New York State and gambles at one of the Tribal casinos in the state, the player's winnings are subject to 30% withholding.
Exception: No tax is imposed on nonbusiness gambling income a nonresident wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the US. So, a Canadian resident who only plays blackjack at a Tribal casino in New York State will not be subject to US income tax on those gambling winnings, if any.
Now let's talk about tax treaties. An applicable tax treaty between the US and a treaty partner may reduce the amount withheld by a US casino. US gambling winnings earned by residents of the following foreign countries is not taxable in the US:
Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukranie, and the United Kingdom.
Claimants must provide the casino a Form W-8BEN (with a TIN) to claim treay benefits on gambling income that is not effectively connected with a US trade or business. Sometimes a payer may accept a W-8BEN without a TIN. If the income is effectively connected with a US trade or business, claimants must provide a Form W-8ECI to claim treaty benefits.
Let's go back to our Canadian resident, and let's call him Stu. Suppose in 2011, Stu won $10,000 in a poker tournament held at a Tribal casino in New York State. The casino is required to withhold $3,000 (30% of $10,000) and issue to Stu a Form 1042-S, Foreign Person's US Source Income Subject to Withholding.
For income paid in 2011 subject to 1042-S withholding, the casino is required to file Form 1042, Annual Withholding Tax Return for US Source Income of Foreign Persons and Form 1042-S with the IRS no later than March 15, 2012. Penalties may be imposed if either requirement is not satisfied.
Takeaway #4: When staking activity involves US nonresidents, Form 1042 and Form 1042-S filing requirements may apply not only to casinos but also to the recipients of the winnings.
How? Back to the original facts. Assume the player wins $100,000, $10,000 of which is a recovery of the entry fee. $45,000 is attributable to both the player and the backer. There are three scenarios to consider:
1. US stakee, nonresident staker
Poker Staking Contract Template
Here, the US resident receives the full $100,000, along with a Form W-2G reflecting $90,000 of gambling winnings. The staker then receives his share from the stakee, but not the full $45,000.
Why? Because US gambling winnings paid to nonresidents are subject to 30% withholding, the stakee withholds $13,500 (30% of $45,000) of the winnings. The stakee then completes a Form 1042-S and issues a copy to the staker, files a Form 1042 by March 15 of the following tax year, and deposits the $13,500 with the US Treasury within a certain timeframe.
Note the stakee is issued W-2G reflecting $90,000 of gambling winnings, half of which aren't his. Again, consult a tax professional to discuss options on how to handle this situation for reporting purposes.
2. Nonresident stakee, US staker
Here, we reverse the roles. The casino withholds 30% of the $90,000, pays the stakee $73,000 (70% of $90,000 plus $10,000 entry fee), and issues to the stakee a Form 1042-S reflecting amounts won and withheld.
The US staker is entitled to $55,000 ($10,000 entry fee plus $45,000 winnings). When the stakee pays this amount, then the stakee is left with only $18,000 cash in hand. Why so little? The 30% withholding imposed by the casino should have applied to only half of the $90,000, but it applied to the full $90,000.
After the close of the tax year, the stakee may file a Form 1040-NR, US Nonresident Alien Income Tax Return to reflect amounts paid and owed. Depending on the taxpayer's other activity during the year, he may receive a refund from the overpayment of tax from the staking activity.
3. Nonresident stakee, nonresident staker
In this last scenario, the consequences are the same as those under (2), except the stakee must withhold 30% of the staker's winnings, and pays the staker the $10,000 entry fee plus $31,500 of winnings after withholding. Filing and depositing requirements apply to the stakee, as described in (1).
As you can see, staking activity can create some tricky tax situations. I haven't heard whether the World Series of Poker will change its policy regarding partnerships for 2012. For now, we have to operate under the assumption that it won't.
Author's note: I must remind all readers that it is impossible to offer comprehensive tax advice on the internet. Information I write on this blog is not legal advice, and is not intended to address anyone's particular tax situation. Should you seek such advice, consult with a tax professional to discuss your facts and circumstances.
IRS Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, I inform you that any US federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.
Playing money for poker fans is also a great relief for the emotions of the players. It certainly helps them to play more calmly and switch less, so they can play their game A much longer. Often, thanks to staking poker, you can also try games in a new poker room, a new poker variant and new risk-free bets. Choosing these experiences would be much more difficult if they were playing with their own money. Assuming you have already sold yourself to the fans by listing your past results and the terms of the current bet you are proposing, there are a number of things you need to consider when issuing the final receipt agreement. Writing a copy is not just a matter of 'I`m going to play x and y events, and my support gets 50% more winnings plus makeup.' If Will supports Steve in a 50/50 deal with 100% makeup for $5,000 buy-ins at the World Series of Poker, and takes Steve for $8,000, most people think they`ll both get $4,000; Well, that`s certainly not the case. When it comes to taking players or looking for a picket, there are many things you need to know, but even if you know who, when, how, how, what and why to cash it, there is still a piece of the puzzle missing; Where? Just because a player is a financial commitment doesn`t mean he`s a bad poker player, or even not trustworthy (i.e. you should be a little more careful if that`s why a player is looking for supports) and many of these players are often the best values in the world of staking. Life happens to everyone, and from time to time, everyone needs help. Stakeback has become one of the most common terms in the world of staking and is very similar to makeup with only a few small differences. In this topic, I`ll go on the ins and outs of the stakeback and everything you need to know about Stakeback as a player and as a supporter. A bankroll usually refers to the amount of money set aside to play poker. In the staking world, a bankroll is what a player wants to scratch, while for fans, it usually refers to the amount of money they have set aside to invest in players.
Poker Staking Arrangements
Poker Staking is an essential part of both live poker and online poker ecosystems. The flow of money from funders into the poker economy is a key factor in ensuring the long-term viability of this economy. There is a wide range of legitimate reasons for someone who has taken a break from the game or had to use his poker bankroll for life events such as paying for medical treatment or bailing out for a house. Another valid reason would be that the player wants to reduce his own variance and his own risk if he goes up to a new level. Very often, for many reasons, players are more comfortable playing under a bet and will often realize that they have a more professional approach when they have to introduce themselves to a supporter. Separating this type of legitimate candidates at the entrance of a poor player or player who has problems managing and controlling bad Bankroll`s tilt is the key to the success of the set-up. Staking is nothing new in the poker world with the practice that dates back to the early days of the game when it was played along the Mississippi River. But now in the age of online poker players increasingly creative with their staking agreements and a new version of staking agreements has appeared and become penetrating the world of poker – it is known as BAP. I will now address all the different aspects that need to be considered by both the player and the supporter to ensure that their playing agreement runs smoothly and remains controversial. In addition to all the basic information mentioned above, it is never a shame to provide additional details to potential supporters, as this can save time and derail any disagreements before they even appear.
