Gambling tax will make you quit online poker sooner

Never be a quitter! Winners never quit and quitters never win. A solid advice. But regulations in Europe have introduced a new kind of tax, a gambling tax, which sooner or later may push you away from the online poker world.

Europe has been over the top to regulate the online gambling industry for good. Poker does fall under this category, despite the fact that it’s considered a skill game by many; and it is! And how exactly do European countries stick to the plan that European Commission has laid down? By keeping their residents inside the borders and implementing ring-fenced poker games.

This of course has already taken its toll to the online poker market, since Frenchmen and Spaniards for example cannot register to worldwide poker tournaments or cash games. At least, as long as they are playing online poker from their homeland.

“Well, each to his own! I can still play online poker! Why do you suggest I may need to quit poker?”

Alright, so you don’t care that if you are visiting a European country that has implemented the ring-fenced poker system, you might not have access to the poker games you are used to. Fair enough. Also, you don’t mind visiting USA, where online poker is still prohibited. Cool. How much time will you be spending on a foreign country after all, right?

I’ll assume you are coming from a country, where the gambling industry is a respectful business. I think we will agree that UK is the country that has the most gambling-friendly laws. So, if you are a poker player coming from UK or any other country, which hasn’t gone hunting down online bookmakers and poker rooms, you are assuming you are saved from the regulation turmoil.

Enter the gambling tax

Even UK is planning on charging the offshore gaming operators a gambling tax in December 2014.

“Phew, that was close. They are after the companies, not the players” you may think.

Not so.

You see companies have a business plan to make money. This plan was created having offshore taxation in mind (as low as 1%). Now they will be forced to pay up at least 15% of their gross gaming revenue to the UK taxman, not to mention other European taxmen.

How will this gambling tax affect players?

Alex Rousso gave a very good explanation last week. According to him, money-losing players will be the ones mostly affected. And poker companies are excited of them. They are the ones feeding all the sharks and break-even players with their hard-earned money, keeping the poker games rolling. Money-winning players and poker operators are the ones eating up this money.

Now it will be a third drain of that resource. And poker sites will certainly protect their margins after the introduction of the gambling tax. Therefore it may not be a taxation imposed on rake, but one way or another it will affect the rate at which bad players are losing their money, since now poker sites would be looking to cover the extra cost. Increasing the rake sounds the quickest solution.

The new tax will also lead the poker operators to cut down their marketing expense, thus less added value to prize pools or even land-based events.

What does all that mean for the money-winning poker player?

Alex suggests, and I agree, that poker sites will do everything they can to keep money-losing players into the mix. They are, after all, the ones who provide the liquidity, the juice that lures more people to try their luck in poker. If they begin losing at a much faster pace due to the gambling tax, they will quit playing poker much sooner. The players’ pool will dry up of fish (money-losing players) much quicker and as a result, the winrate of good regular players will drop as skilled players’ percentage will dramatically increase.

But wait, there’s more.

How do poker sites keep money-losing players at their virtual tables? By decreasing that skill! According to Alex, that means more anonymity, disallowing poker software, obstructing HUDs, disabling data-mining and so on. Sharks will have a much more difficult task to extract value from bad players.

Will you still refuse to quit poker?

While money-losing players will experience heavier losses, the break-even player will gradually turn into one of them! The bell curve of the winrate will slightly shift to the left in terms of BB/hour. The average winrate will decrease and in the end, all players will be affected by the new gambling tax. Even professional micro grinders, who will add more tables and drop down a level, may give up as the rake might be too high to overcome as Alex states.

[box type=”info”]A note about that bell curve: blue and red zones will remain unchanged, since the deck of cards will still be cold or hot in the same proportion as before. As I edited the original bell curve (Earth temperature rising), I saved time by leaving those areas unchanged. Sorry for that.[/box]

Do you believe you will still be playing poker and making money after the introduction of the gambling tax? Are you that good? Or do you think that poker sites won’t pass the gambling tax to the players, one way or another? Is poker dying really? Let me know in the comments below.