Nov 21, 2014
November Nine Taxes: Why Poker Players Want to Live in London
By RTR Dennis
There was some talk after the 2014 WSOP Main Event ended that European players are gaining a skill advantage over Americans. And the reasoning is that many Europeans have easier access to online poker, especially those living in the regulated environment of London. "Maybe Europeans have a small advantage because online poker is still widely available," said third-place finisher Jorryt van Hoof. "I guess that makes us able to practice more, so I hope America gets (online) poker back soon, so they'll get to practice more as well."
What van Hoof speaks of is just one great reason to be a London-based poker pro right now. And here's another: of the four London residents who made the 2014 November Nine, none are expected to pay any taxes on their winnings. That's because the UK does not tax gambling income.
To illustrate just how big this is, let's look at how Russ Fox of TaxableTalk.com breaks down the before-and-after-taxes winnings:
2014 WSOP Main Event Final Table (Before/After Taxes)
1st. Martin Jacobson (London) - Won $10,000,000, keeps $10,000,000
2nd. Felix Stephensen (London) - Won $5,147,911, keeps $5,147,911
3rd. Jorryt van Hoof (London) - Won $3,807,753, keeps $3,807,753
6th. Andoni Larrabe (London) - Won $1,622,471, keeps $1,622,471
4th. William Tonking (USA) - Won $2,849,763, keeps $1,534,006
5th. Billy Pappas (USA) - Won $2,143,794, keeps $1,260,490
7th. Daniel Sindelar (USA) - Won $1,236,084, keeps $741,687
8th. Bruno Politano (Brazil) - Won $947,172, keeps $663,020
9th. Mark Newhouse (USA) - Won $730,725, keeps $406,558
It's no wonder poker pros move to London
Jacobson is originally from Sweden, Stephensen is from Norway, van Hoof is from the Netherlands, and Larrabe is from Spain. But all four made the decision a while back to live in the UK for that attractive 0% tax rate on poker winnings.
As Fox points out about Jacobson, he gets to keep all $10 million of his winnings, rather than forking over $5.6 million to the Swedish government (based on 56% tax rate). Van Hoof may have been prevented from getting a sponsorship deal due to it being against Dutch law. However, his London residence helped him avoid paying $1,104,248 to the Netherlands (29% tax rate). The same goes with Larrabe, who would've paid 52% of his $1,622,471 prize to the Spanish government.
Why don't more Americans move to London?
Based on what we just discussed, it seems a no-brainer that American poker pros would want to live in London. After all, doing so would have saved fourth-place finisher William Tonking $1,315,757 in taxes, right? But as Fox mentions in his post, Americans must still file with the Internal Revenue Service (IRS) for worldwide earnings. A US resident could get away without paying taxes on their UK earnings because of the Foreign Earned Income Exclusion rule. However, an American living in London would still have to pay up on winnings earned in Las Vegas.
Obviously this is a handicap for US players, and it offers a bit less incentive to live in the UK. But as Jacobson, Stephensen, van Hoof and Larrabe showed, London is definitely a great place for grinders from other countries.