In July 2010, I wrote an article on the French poker tax questioning whether any poker company would manage to be profitable in that environment. It is still too early to tell but it is interesting to compare with the proposed poker tax in Florida.
The French system taxes cash game pots and tournament prize pools at 2%, which may sound low but since the revenue poker operators typically take from cash game pots is capped at 5% and from tournaments around 10%, the actual tax level is roughly 40+% and 20% of the revenue, respectively. Even pots where no rake is taken are taxed. This system forces French poker operators to impose the tax directly onto the players by increasing the rake, giving the players less entertainment for their money. I predicted and I still believe that this will lead to a higher churn rate but I have not seen any numbers confirming that yet.
The Florida online poker bill that passed the Senate committee yesterday has a way superior system. Instead of taxing pots and tournament prize pools, it taxes gaming revenue and the tax level is 10%, which is more reasonable. The 10% tax is probably lower than what most current US poker operators have to pay their payment providers today so it is unlikely that poker companies would have to increase the rake to afford the taxes.
Poker companies like Pokerstars and Full Tilt are excluded from getting a Florida license because they have accepted wagers after UIGEA was passed by Congress in 2006. At the same time it is a requirement that “the applicant has existing and established experience with Internet gaming”, which means that the bill seems designed for European poker networks. Some lobbyists have obviously been more successful than others. It is still uncertain whether this bill will become law but it is interesting to follow the process in different states.
Jonas Ödman
Vice President, Bodog Network
