The 2017 Real Winners at the World Series of Poker (London Calling, Again)

The main event of the World Series of Poker has completed: 7,221 ponied up $10,000 to enter. The final nine players began competing on Thursday; last night the winner was crowned. How much of his winnings does he get to keep? And why are four of the nine very, very happy that their court system considers poker to be a complete game of chance?

One note: I do need to point out that many of the players in the tournament were “backed.” Poker tournaments have a high variance (luck factor). Thus, many tournament players sell portions of their action to investors to lower their risk. It is quite likely that most (if not all) of the winners were backed and will, in the end, only enjoy a portion of their winnings. I ignore backing in this analysis. Now, on to the winners.

Congratulations to Scott Blumstein of Morristown, New Jersey for winning poker’s biggest prize of $8,150,000. Mr. Blumstein came into the final table with the overwhelming chip lead and never relinquished it. Mr. Blumstein ended a long head-up battle when a deuce was the last community card and his Ace-deuce beat his opponent’s Ace-eight. A professional gambler, he’ll lose 47.11% of his winnings to federal and New Jersey tax ($3,839,429). Even though he had the largest winnings, he does not face the top tax burden among the nine (his is the second highest).

Dan Ott of Altoona, Pennsylvania (near Pittsburgh) finished in second place. Mr. Ott started the final table in fifth place, and worked his way into second place and a prize (before taxes of) $4,700,000. His state tax burden is the lowest among Americans (Pennsylvania’s state income tax is a flat 3.07%), but as a professional gambler he must also pay Altoona’s Earned Income Tax of 1.60%. Overall, Mr. Ott will pay an estimated $2,099,806 in tax (44.68%) to obtain after-tax winnings of $2,600,194. Indeed, Mr. Ott almost falls to fourth place based on after-tax results.

Finishing third and winning $3,500,000 was Benjamin Pollak. Mr. Pollak, originally from Paris, France, moved to London. Why would a Frenchman move from beautiful Paris to London? In a word, taxes. As a European Union resident, he could move to any other E.U. country and fall under their tax system. The US-United Kingdom Tax Treaty exempts gambling winnings from withholding. Additionally, poker winnings are completely tax-free in the United Kingdom (a court case a few years ago cemented this for now), so Mr. Pollak gets to enjoy all of his $3,500,000 of winnings.

But let’s assume that Mr. Pollak had remained living in Paris. On the positive side, the US-France Tax Treaty exempts gambling winnings from withholding. On the negative side, France is anything but a low-tax country. I cannot be certain of the taxes for 2017; the actual tax rates are voted in towards year-end so I’ve used the 2016 tax rates for my analysis. However, I doubt 2017 rates will vary significantly from last year. At an income of €152,260, the marginal tax rate is 45% (the highest in France). There’s also a surtax of 3% at an income of €250,000 or more (and this rises to 4% at €500,000 or more). Mr. Pollak would owe about 48% of his winnings in tax. No wonder London was calling for him!

You may be wondering why American professional poker players don’t hop a 747 and move to London. First, Americans owe tax on their worldwide income, so an American residing in London would still owe tax on his World Series of Poker winnings. Second, while Europeans currently can relocate to the United Kingdom per the European Union, Americans cannot.

(One thing that is very unclear today is how long Frenchmen will be able to lower their tax by moving to England. With the passage of Brexit last year sometime in the near future the United Kingdom won’t be part of the European Union; the tax benefits of residing in the United Kingdom for French poker players will vanish. But I digress….)

The individual who had the most fun at the final table was clearly John Hesp of Bridlington, England. Mr. Hesp, a grandfather of seven and the oldest competitor (he’s 64), is decidedly not a professional poker player. Indeed, his prior tournament experience was playing in £10 (about $13) tournaments at his local casino in Hull; here, he was competing in a $10,000 (about £7,695) tournament! Mr. Hesp was clearly having the time of his life; the $2,600,000 he won will make this trip to Las Vegas a great memory. Even better, he gets to keep all the money.

Antonie Saout of Morlaix, France finished fifth and won $2,000,000 before taxes. Mr. Saout also lives in London (in fact, he shares an apartment with Mr. Pollak) so he, too, benefits from the United Kingdom’s great treatment of poker players. His after-tax winnings are his pre-tax winnings of $2,000,000. Had Mr. Saout remained a resident of France he would have owed about 48% of his winnings to the France Tax Agency. This was the second time Mr. Saout made the final table of the WSOP main event: He finished in third place in 2009.

Bryan Piccioli of San Diego ended up in sixth place and won $1,675,000 before taxes. Mr. Piccioli is a professional poker player and faces the highest percentage tax burden among the final nine: an estimated $489,328 to federal tax and $201,695 to California income tax (a total tax burden of $791,023, or 47.23%). Based on after-tax winnings, Mr. Piccioli finished in eighth place.

Damian Salas of Buenos Aires, Argentina finished seventh. Mr. Salas is a former attorney who is now a professional poker player. He earned $1,425,000 for his efforts. Argentinians love gambling and gambling winnings are not subject to income tax in Argentina. (Casinos in Argentina do pay significant taxes.) However, the United States and Argentina do not have a tax treaty; thus, Mr. Salas will lose 30% of his winnings to the Internal Revenue Service.

In eighth place was Jack Sinclair of London; he received $1,200,000 in winnings. Like the others residing in the United Kingdom he gets to keep all of his winnings. In one sense Mr. Sinclair was the biggest winner despite finishing eighth. Based on after-tax winnings of $1,200,000 Mr. Sinclair finished sixth. It’s always nice when your after-tax income is the same as your pre-tax income.

Ben Lamb, a professional poker player from here in Las Vegas, finished in ninth place. This was Mr. Lamb’s second time finishing in the top nine of the main event (he finished third in 2011). Mr. Lamb loses an estimated $408,483 (40.85%) to federal income tax. As a resident of the Silver State Mr. Lamb doesn’t have to worry about state income tax on his winnings.

Here’s a table summarizing the tax bite:

Amount won at Final Table $26,250,000
Tax to IRS $6,390,860
Tax to New Jersey Division of Taxation $754,196
Tax to Franchise Tax Board (California) $201,695
Tax To Pennsylvania Department of Revenue $144,290
Tax to Altoona Earned Income Tax $75,200
Total Tax $7,566,241

That’s a total tax bite of 28.82%. That’s fairly low for the main event because four of the winners face no taxation at all.

Here’s a second table with the winners sorted by their estimated take-home winnings:

Winner Before-Tax Prize After-Tax Prize
1. Scott Blumstein $8,150,000 $4,310,571
3. Benjamin Pollak $3,500,000 $3,500,000
2. Dan Ott $4,700,000 $2,600,194
4. John Hesp $2,600,000 $2,600,000
5. Antoine Saout $2,000,000 $2,000,000
8. Jack Sinclair $1,200,000 $1,200,000
7. Damian Salas $1,425,000 $997,500
6. Bryan Piccioli $1,675,000 $791,023
9. Ben Lamb $1,000,000 $597,517
Totals $26,250,000 $18,683,759

As noted previously, Bryan Piccioli finished in sixth place but based on after-tax winnings he ends up in eighth place. While taxes may be the price of civilization, the price in the United States is high.

This was an off-year for the IRS. The IRS’s total of $6,390,860 didn’t match the first place prize of $8,150,000. Still, it did exceed the first place winner’s after-tax prize of $4,310,571. That’s because we all know that the house (the IRS) always wins.

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