What percent of onliner poker players are profitable?

[MisterKing]

[ QUOTE ]
Ok, even if you lose enough to get to itemize you still lose out by losing your standard deduction. Say you made that same 1000 grand playing poker but this year you did it by winning sessions that totaled 25k and losing sessions that totalled 24k. Great, now you itemize your 24 k in losses and only pay taxes on your net win of 1K. So 250 dollars in taxes. Yea! You're still in the black for poker! But wait a minute, because you would have taken the $9720 standard deduction but for your poker play, you now have 9720 more in taxable income than you would have had. At a marginal tax rate of 25%, that's $2430 in extra taxes. Congratulations, winning that 1000 bucks caused you to lose cost around 1700 dollars in real money.

Now if you do itemize, I don't belive that you can be turned into a net loser by taxes, (please correct me if I'm wrong) but you could come out worse financially by the fact of having your Gross Income increased by having to report your total poker winnings before deductions for losses in your gross income. This could cause you to miss out on medical deductions and limit your ability to contribute money to various retirement vehicles among other things.


[/ QUOTE ]

Aren't these two paragraphs semi-contradictary? I think I agree with where you're going, and definitely agree that the tax system for rec gamblers sucks donkey balls.

Depending on how much we win/lose, we either use the standard deduction of ~3450/person (for single adults), or we don't. If our losses are <3450, then we pay tax only on our winning sessions, which I've shown can often be 200% of our net win. If guy A makes 70K at a "real job," has winning sessions of $5,000 and losing sessions of $2,500, then he is going to have an AGI of 71550 after poker instead of 66550 before poker. The tax on that $5K extra (assuming the 25% rate, and I don't know if that's the right rate) is $1,250, so Guy A didn't win $2,500 in poker, he won $1,250. That's freaking harsh. If you make him a more marginal winner (say winnings of $3,700 and losses of $3,300) then I think he actually does LOSE money on poker after tax.

Also, you mention an effect increased gross earnings might have on opportunities like medical and retirement deductions... any chance you could explain this further?

[Sniper]

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Do you any evidence to support this statement?

[/ QUOTE ]

Note that I didn't say all posters, I said long term active posters... and the evidence is in the strategy forums if you look for it.

[Sniper]

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I've seen estimates of about 2,000,000 online poker players each week (total number = somewhere north of that).

[/ QUOTE ]

This number is way too high!

Party is on track to rake roughly $1 billion from roughly 1 million people in 2005.... or an average of $1000/person/yr.

[Sniper]

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I do have theories on this number. I think it is higher than the reported 8%. If an idiot like myself can be a winning player I dont see why only 8% of the people qualify.

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No, the reason the number is so low, is because alot of people play MTTs, which only pay out to the top 10%, and therefore the number of long term winners at MTT's is substantially below 10%.

[Sniper]

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Second, I know exactly zero players who play exclusively online. I'm sure there are many out there, but I don't know them. Online players like to go to B&M joints, and when they do they incur poker expenses that should count. Thus my mention of those things.

[/ QUOTE ]

The thread topic is about % of online poker players that are profitable. Whether the player is profitable or not from B&M play is irrelevant.

Also, there are many players who play exclusively online, globally there are many people who live no where near a casino!

[Sniper]

[ QUOTE ]
So - back to the original point. If you have 1-million players who all played 100 or 1000 hands each you still don't have a sufficient sample size to determine how many of those players are true winners.

[/ QUOTE ]

The point of whether players would be winners after far more hands than they will ever play is irrelevant. In determinig a winning%, its only relevant how many they actually play!

[MisterKing]

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[ QUOTE ]
Second, I know exactly zero players who play exclusively online. I'm sure there are many out there, but I don't know them. Online players like to go to B&M joints, and when they do they incur poker expenses that should count. Thus my mention of those things.

[/ QUOTE ]

The thread topic is about % of online poker players that are profitable. Whether the player is profitable or not from B&M play is irrelevant.

Also, there are many players who play exclusively online, globally there are many people who live no where near a casino!

[/ QUOTE ]

You are acting like a fawking nit here. I get your overarching point, and I don't care that my post treads somewhat outside the delicate boundaries you'd prefer the thread maintain.

If the question is how many "online poker players" (the phrase you use) are "profitable" (again, your phrase), then in many many many cases you have to consider B&M play and taxes and other factors, since lots of "online poker players" take their online bankroll to a casino, play live, maybe take some shots, whatever. The fact that someone is a winning player online, but a loser in live play or after taxes still means they're not "profitable." They may *think* they are, and it may *appear* they are in PokerTracker, but they aren't.

An "online poker player" is only "profitable" if, in the sum of his or her poker play in all venues online and otherwise, after all associated costs, nets a profit. Again, this helps explain why so many people may think they're winners when in reality they're not.

So if the question is "What percent of online poker players are profitable in online play only" then I guess I'd stop going on about external factors like B&M play. But that is not the question. The question is much more general.

[Zetack]

[ QUOTE ]
[ QUOTE ]
Ok, even if you lose enough to get to itemize you still lose out by losing your standard deduction. Say you made that same 1000 grand playing poker but this year you did it by winning sessions that totaled 25k and losing sessions that totalled 24k. Great, now you itemize your 24 k in losses and only pay taxes on your net win of 1K. So 250 dollars in taxes. Yea! You're still in the black for poker! But wait a minute, because you would have taken the $9720 standard deduction but for your poker play, you now have 9720 more in taxable income than you would have had. At a marginal tax rate of 25%, that's $2430 in extra taxes. Congratulations, winning that 1000 bucks caused you to lose cost around 1700 dollars in real money.

Now if you do itemize, I don't belive that you can be turned into a net loser by taxes, (please correct me if I'm wrong) but you could come out worse financially by the fact of having your Gross Income increased by having to report your total poker winnings before deductions for losses in your gross income. This could cause you to miss out on medical deductions and limit your ability to contribute money to various retirement vehicles among other things.


[/ QUOTE ]

Aren't these two paragraphs semi-contradictary? I think I agree with where you're going, and definitely agree that the tax system for rec gamblers sucks donkey balls.

Depending on how much we win/lose, we either use the standard deduction of ~3450/person (for single adults), or we don't. If our losses are <3450, then we pay tax only on our winning sessions, which I've shown can often be 200% of our net win. If guy A makes 70K at a "real job," has winning sessions of $5,000 and losing sessions of $2,500, then he is going to have an AGI of 71550 after poker instead of 66550 before poker. The tax on that $5K extra (assuming the 25% rate, and I don't know if that's the right rate) is $1,250, so Guy A didn't win $2,500 in poker, he won $1,250. That's freaking harsh. If you make him a more marginal winner (say winnings of $3,700 and losses of $3,300) then I think he actually does LOSE money on poker after tax.

Also, you mention an effect increased gross earnings might have on opportunities like medical and retirement deductions... any chance you could explain this further?

[/ QUOTE ]

The two paragraphs aren't contradictory, but they may be unclear. In the first one you quoted I was talking about a situation where you would take the standard deduction except that your poker losses exceed the standard deduction. Now you itemize but your only itemized listing is your poker losses. The net effect is to increase your taxable income by the amount of the standard deduction.

In the second paragraph I was talking about if you do itemize deductions, not factoring in poker losses. If you do that, you do get the benefit of the entire poker losses and effectively are only taxed on your net poker winnings.

However, in that second situation, note that things like the threshold for itemizing medical deductions is based on your AGI. So say you are have an Adjusted Gross Income of 70k. You can only deducet medical expense to the extent it they exceed 7.5% of the AGI, or in this case only expenses over 5250 dollars.

However if you make 10k in poker winnings with 100k in total winnings and 90k in total losses, you know have 170k in AGI and now your threshold for itemizing medical losses goes up to 12750 dollars.

Also, there are income thresholds above which you can not contribute to things like IRA's, and that threshold is based on you AGI before your itemized gambling losses. So you can have very minor wins and even net losses but inflate your AGI and so lose the ability to save for retirment. I don't know the details on those though, so perhaps somebody else could elaborate.


Basically it just sucks.

--Zetack

[Sniper]

[ QUOTE ]
So if the question is "What percent of online poker players are profitable in online play only" then I guess I'd stop going on about external factors like B&M play. But that is not the question. The question is much more general.

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I am content that we both have diffferent interpretations of what information the OP was looking for! [img]/images/graemlins/smile.gif[/img]

[MisterKing]

I hear ya... agreed. Different strokes, I guess. Sorry to be a little over the top in my last reply.