There’s another part to the story of this year’s World Series of Poker main event winner: backing. And it has one tax agency smiling even more, while another will miss out on 50% of an unexpected bounty.
This year’s main event winner, Joseph Cada, was backed when he entered the main event of the World Series of Poker according to this news story in the Detroit News.
Backing is fairly common in large buy-in poker tournaments. Playing poker professionally, especially tournaments, involves a lot of what poker players call variance. No matter how good a player you are, sometimes luck is not with you. Your aces may lose to kings, as will happen about one in seven times. Most poker players do not have enough money in their bankrolls to handle the variance, so they seek investors who have large bankrolls to help finance their entries. In return, the investors demand a percentage of the player’s winnings.
Mr. Cada was backed by a pair of investors from New York, Eric Haber and Cliff Josephy. The pair will receive 50% of the winnings of Mr. Cada. That’s good news for the New York Department of Taxation and Finance which will receive an extra windfall of $383,335. It’s bad news for the Michigan Department of Treasury which loses $185,898.
Here are the adjusted numbers for the various tax agencies:
| Amount won at Final Table | $27,220,989 |
| Tax to IRS | $8,150,527 |
| Tax to French Tax Agency | $1,391,868 |
| Tax to NY Dept of Taxation | $743,492 |
| Tax to MD Comptroller | $319,637 |
| Tax to MI Dept of Treasury | $185,898 |
| Total Taxes | $10,791,421 |
That’s a total tax bite of 39.64%.
Here’s a second table with the winners sorted by their estimated take-home winnings:
| Winner | Before-Tax Prize | After-Tax Prize |
| 2. Darvin Moon | $5,182,198 | $3,067,595 |
| 1. Joseph Cada | $4,273,521 | $2,500,660 |
| 1A. Mr. Cada’s Backers | $4,273,521 | $2,292,210 |
| 3. Antoine Saout | $3,479,670 | $2,087,802 |
| 4. Eric Buchman | $2,502,890 | $1,332,123 |
| 5. Jeff Shulman | $1,953,452 | $1,281,757 |
| 9. James Akenhead | $1,263,602 | $1,263,602 |
| 7. Phil Ivey | $1,404,014 | $879,018 |
| 6. Steven Begleiter | $1,587,160 | $878,921 |
| 8. Kevin Schaffel | $1,300,231 | $845,150 |
| Totals | $27,220,259 | $16,428,838 |
The New York Department of Taxation and Finance should send a thank you card to Mr. Cada. After all, he could have chosen backers from a state like Nevada (which has no income tax). Instead, because of Mr. Cada’s good fortune and his choice of backers, New York ends up with an extra $383,335. I’m sure the politicians will spend that money in two seconds or so….
Tags: WSOP
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