Tax ? - Setting up an S Corp

[Patrick del Poker Grande]

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In addition, states such as Colorado have clauses such as:

18-10-106
Whoever knowingly transmits or receives gambling information by telephone, telegraph, radio, semaphore, or other means or knowingly installs or maintains equipment for the transmission or receipt of gambling information commits a class 3 misdemeanor. If the offender is a repeating gambling offender, it is a class 6 felony.

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Colorado law provides:

"Gambling information" means a communication with respect to any wager made in the course of, and any information intended to be used for, professional gambling. In the application of this definition the following shall be presumed to be intended for use in professional gambling: Information as to wagers, betting odds, or changes in betting odds. Legitimate news reporting of an event for public dissemination is not gambling information within the meaning of this article.

That sounds pretty harsh. As the poster above said, it sounds like posting to 2+2 might violate Colorado law, because you're providing information to be used in professional gambling. However, the definition of professional gambling is not quite what I expected to find:

"Professional gambling" means:

(a) Aiding or inducing another to engage in gambling, with the intent to derive a profit therefrom; or

(b) Participating in gambling and having, other than by virtue of skill or luck, a lesser chance of losing or a greater chance of winning than one or more of the other participants.

This language needs a little parsing. (a) seems to include, for example, staking a poker player. It also probably includes sharing your Party affiliate code, since you intend to "derive a profit" from getting people to sign up at Party. It wouldn't include most poker advice posted at 2+2, however, since there's no profit in it for the poster.

(b) took me a minute to figure out. It says gambling where you make money "other than by skill or luck." Well what does that leave? Cheating? Maybe, but it also includes, among other things, the house. So "professional gambling," as this one state defines it, does not include someone who makes money by playing poker well, even if they make a million dollars. But if they are involved in financing other gamblers, or in making money off the gambling profits of others, then they probably have a problem.

None of this is probably interesting at all unless you're in Colorado, and maybe even then. But I thought it illustrates the definitional perils involved in trying to figure out what is legal, and what is not, in a given state. And when you're running an online enterprise you probably have all 50 states to worry about...

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This isn't the end of it, though. Check out a previous thread that I posted in regarding more general gambling in Colorado. I keep posting about CO because that's the state I'm most interested in, but I'd imagine many/most states are very similar.


Patrick

[CORed]

I think "other than by skill or luck" would include running a game with a house edge. It would, as you said, not seem to include playin winning poker, but it probably would include raking a poker game.

[CORed]

My understanding of Colorado law (and I could be wrong) is that social gambling is legal. My recollection is that if people with an "existing social relationship" (or something like that) place wagers, and no money is raked, it's legal. This applys to things like sports pools as well as poker games. I think a home game is legal, as long as it's not raked. I'm not sure about a rake that is just used to meet expenses.

[elwoodblues]

Keep in mind that social poker/gambling wasn't the issue of the orginal post. The original post was about online gambling. Online gambling is very different than social gambling in that a rake is charged and the participants are largely anonymous and have no pre-existing relationship.