Centaurus Games Poker Blog

It’s freezing in Las Vegas.  Isn’t it supposed to be hot in the desert, even in December? I just glanced outside and it’s pouring down rain. Glad I just washed my car. I came back from Washington last night, where of course it was sunny and clear. A bit cold, still beautiful.

But it’s all a trick.  You think “Oh, I want to move back…”, then comes the 200 straight days of cold, grey and wet.

This month also reminds me that I need to keep in touch with old friends.  So I spent a little more time on Facebook updating them and on my new addiction: Twitter @brettcalapp. 

If you didn’t get to read this month’s newletter, you missed a nice little featurette on our Four Color Deck option.  I now have a much greater appreciation for this functionality because I’ve been informed by my doctor that I need to get glasses.

The Club supports a four-color deck, which allows you to change the color of the suits to help in identifying them during game play. Spades are black, Diamonds are blue, Hearts are red, and Clubs are green.

To turn on the four color deck feature:

1.            Right click and choose “options” from anywhere on the poker table.

2.            Under table options, click the check box next to “Four Color Deck.” This will put a checkmark by this feature.

3.            Click “apply” and then “okay.”

4.            Go to a table and you will now see all four colors!

You can switch back at any time. Just follow the instructions above and uncheck the box next to “Four Color Deck.”  The best thing about this feature is that it’s only seen on your computer, so nobody else needs to know; our little secret.                       

 The “Holiday Hookup” started yesterday with lots of great extra prizes just in time for the holidays.  The tournaments are fast and furious using our “ultra turbo” format (two and a half minute blinds). So if you find yourself without a lot of free time, these are the ones to play. There are video games (think Modern Warfare 2 and Tony Hawk), gift cards to Walmart, iTunes and ToyRus, TAG Heuer sunglasses, movie tickets from Fandango and some ultra stylish clothing from KSINO.com.

THIS JUST IN…to celebrate New Years in style, the club is going to be giving away gift packs of Zino Platinum cigars. These cigars have received countless honors and are an incredibly bold, beautiful cigar with a full bodied aroma. zinoplatinum.com .  And if you don’t like cigars, remember these make a great gift for that favorite uncle or best friend.

It’s finally November and so close to one of the great eating days of the year.  That’s why I’m excited to say the winner of the ThanksGIVING $1000 poker tournament will also have a donation made to Feed America (www.feedamerica.org) in their name.  Each year, the Feeding America network provides food to more than 25 million low-income people facing hunger in the United States, including more than 9 million children and nearly 3 million seniors.

We’ve got some great tournaments lined up at the Club.  The most exciting news is the 12 WPT Celebrity Invitational seats we are giving away. Congrats to “brockway”, “gobigray”, “HeliFlopster” who have already secured their seats to this event. There are 3 more seats being awarded this month: November 11th, 15th and 25th, all at 9pm ET.  This is a great tournament and a lot of fun. I’ve been lucky enough to participate the last few years and have some great memories.

Last year I was running late and got wait-listed along with about a dozen other people. With some time to kill, I got a cocktail and went over to where they corralled the rest of the players-in-waiting. I started talking to a pretty cool guy named Chris. It turned out he did some work for TVG in the past (interative horseracing) and we chatted about poker. I asked him what he did now…his response: “I host a show called the Bachelor.” My reaction: “Is that job like being the DJ at a strip club?”

My name came over the loud speaker. I thought to myself “good, now everyone knows I’m here”.  I wandered to my seat.  Just my luck, I found myself seated with my good friend Reeve Collins (CEO – Red Lever), WPT CEO and Founder Steve Lipscomb, pros Barry Greenstien and Maria Ho, actors Don Cheadle and Jimmy Van Patten.  I sat down, chatted with my table and nonchalantly glanced at my first hand…pocket eights.  Then the flop came with an 8. One guy put me All In.  What the #*$@!  I’m completely frazzled.  I think to myself how embarrassing it will be to go out on the first hand I play.  But on the other hand I do have a set.  So I do what any self-respecting person in this situation would do…I completely chicken out and fold. I see the guy sign…I got bluffed! Way to start the day, Calapp.

Interesting facts I learned last year:

• Richard Karn (Al from Home Improvement) lives up on Pine Lake in Issaquah, Washington. I went to Pine Lake Middle School.
• Marlon Wayans is just as funny in real life as he is on TV.
• If Lou Diamond Phillips comes up and gives you a bro-hug…go with it…it’s La Bamba for crying out loud. (My wife loves that movie.)
• The line for the bathroom at these events is always long. I found myself in an unusual conversation with one of the guys from Everyone Loves Raymond about germs and how a certain percentage of chips have some really bad bacteria. Lesson to all: Always wash your hands before and after you use the restroom.

Back to the Club. We are giving away two Shuffle Tech ST-1000 automatic card shufflers this month and two more in December.  This is a perfect way to pimp-out your home game.  There are still two seats left for one lucky Club member to win for the Annie Duke Celebrity Poker Night 09 benefitting DEF (www.decisioneducation.org).  Three club winners are going to play in this great event alongside some of the best and brightest pros, actors and entertainers.  Another seat to a WPT $10,000 event will be up for grabs on Nov 14th at 9pm ET along with $10,000 of cold hard cash on Nov 28th at 9pm ET.

November is Ladies Month for our TAG Tuesday tournaments.  Every Tuesday we will give away 2 pairs of TAG sunglasses (strictly sized for the ladies this month).  We’ve also got year supplies of Blue Diamond “Bold” Flavored Almonds, custom built Big Slik Poker tables, and as always lots of cash.

Foxwood’s World Poker Finals kicks off shortly. Good luck to Club members “jlopez74”, “qhorses”, and “wantsome”.

October isn’t even halfway over and it’s already been an exciting month. First and foremost we awarded our three-millionth dollar earlier this month. Hard to believe, but it wasn’t that long ago when we awarded dollar one. I can’t wait until we’re giving away a million a month. Congrats to everyone who has helped get us this far.

This month has some great new prizes including a custom built Big Slik poker table that includes the winner’s name on the felt. Tuesdays in October feature TAG Heuer sunglasses – the ones Ferrari Formula One driver Kimi Räikkönen wears. We’ve even got something fun cooked up for Halloween night (besides the $10,000 in cash we are already giving away that night). But wait! There is something even bigger on the horizon. I can’t announce what it is yet but it’s an extra special October treat from our friends at the World Poker Tour. More information will be available shortly.

In other WPT related news, we are sending 3 Club members (jlopez74, qhorses, wantsome) to play in the 2009 Foxwoods World Poker Finals on Nov 5^th 2009. This $10,000 buy-in event always stirs up some great poker competition. We’ll have to see if there will be another marathon match like last year when the two Jonathans (Jonathan Jaffe and Jonathan Little) played heads up for over five hours before Little took down the final hand and $1.12 million.

What I can’t stop doing is eating these Blue Diamond almonds. As you know, you can win a year’s supply of these “Bold” flavored almonds (my favorite is Jalapeno Smokehouse) right now at the Club. We were lucky enough to have the folks at Blue Diamond send us a couple extra packs (actually a whole case) for us to try out all the flavors. Now there are almonds everywhere in our offices; which may be why visitors seem to be lingering a bit longer than usual.

On May 19, 2009 California voters defeated ballot Proposition 1C which would have allowed the state to borrow from future lottery proceeds to help fund the estimated $42 billion deficit in the current budget. Some people are now suggesting that the state will move to legalize one form of internet gambling, poker, by introducing and passing the Online Poker Enforcement Compliance Consumer Protection Act. I am not so sure. There concepts addressed in the legislative proposal, (it is not a bill yet) may make sense to some and not to others. A sensible point is that it does seek to comply with the intra-state exemption under the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”). The rationale is simple, as the most populous state in the nation, and possibly the sixth- seventh largest economy in the world, California may be a good free standing model. Many smaller states would likely benefit from federal legislation that would allow cross border reach. But, is now the right time to try and solve the budget deficit in part through legalization of a form of online gambling? It may or may not be.

The yet to be introduced proposal is the subject of intense discussions among and between many of the affected interests, namely, card clubs, race track operators, tribal casino operators, state regulators and other groups. The economic forecasts vary widely, based upon assumptions of market size, average revenue per customer, tax rates and other factors. But, the current deficit cannot, in the short term be reduced by a implementing a system, still in the design phase. It may take several years for all the pieces to come together, and even then, the real outcome, may or may not be meaningful to the state. So the argument is why not at least get started so that in future years the revenues from legalized online poker will at least contribute to a reduction in the growth rate of the deficit. This is both a legal and political question for California. The California enabling legislation would need to comply with all of the requirements of the UIGEA, intrastate exemption, but most importantly it would need political support.

Political support may come from the top down, that is through the influence of lobbyists for those interests expecting to benefit from legalization, and from the bottom up, such as from poker player groups. But, at least one poker players’ organization as supported the Frank bills, HR. 2266, and H.R. 2267 which propose a federal system of licensing, subject to the states opting out. Whether the organized poker player groups would really support a California bill will ultimately test their motivation. Without a broad base of support, it is questionable whether the current efforts will be effective in bringing about legalization of online poker.

On May 6, 2009 three bills were introduced in the House of Representative, two by Rep. Barney Frank and one by Rep. Jim McDermott. The bills were and now are the subject of much discussion.

My impression of the bills and my present forecast future for legalized internet gambling is as follows:

First, the bills can be broken down into their goals. H.R. 2266 extends the implementation of the UIGEA regulations from December 1, 2009 to December 1, 2010. This bill may help the financial services sector, in delaying some implementation costs. This bill can be passed on its own.

The second and third bills, H.R. 2267 and H.R. 2268 respectively establish a federal licensing system and a tax system. These bills seem to be very much inter-dependent and will survive or die as a package. In simple terms, the licensing bill creates a system of regulation which is binding on the states, unless they opt out within 90 days of enactment. This point, may be a deal breaker on its own. The reason is that right now, under UIGEA, states can adopt wholly intrastate internet gambling. This means that large population states, like, California, Texas, New York, Pennsylvania, can capture their the tax revenue and jobs entirely, while the states with lesser population, probably will not have the critical mass necessary to make games (like poker) successful. So the conflict is inherent. Who would benefit beyond the small states, well large multi-state, and multi-national corporations for a start would want a single licensing regime that allows them to have a large scale marketing plan that crosses state borders with a unified message and that minimizes competition. Just how the various tribal interests will respond to the bills, is not totally clear to me at this time. Another aspect of the licensing bill is who is qualified and who is disqualified to be issued licenses. At first blush, the major land based casino companies will surely qualify. Other corporate interests, may qualify as well. Unlikely to qualify are any of the off-shore companies, who offered internet gambling products in the U.S., or any of the officers, directors, or principal shareholders. Further, while some companies ceased to offer services post enactment of UIGEA, there is a distinct possibility that a provision in the licensing bill will be used to keep them out. The provision I am referring to is the requirement that all Federal and State tax returns must have been filed, and not be delinquent, with all taxes paid, including additions to tax, interest and penalties.

In my last note, I described the FBAR rules, well those would seem to be included. Further, as a condition of the application, all applicants submit to U.S. jurisdiction for all purposes. I question whether any of the off-shore operators will submit to jurisdiction with the risk of disqualification. But, one could argue that the off-shore companies will just not apply and continue business as usual. That is a distinct possibility, but they will be subject to claims of U.S. taxation and licensing fees regardless. The tax bill provides that licensees will pay a 2% of gross wager fee monthly, but unlicensed operators will be subject to a fee of 50%. How this fee will be assessed and collected from off-shore operators, is a bit outside the scope of this note. The tax bill does provide for information collection from players and withholding on all winnings as paid.

So, my conclusion is that the future is going to be filled with uncertainty over which form of regulation is adopted, a federal system with the states opting in, or opting out, and who the likely licensees will be. One thing is clear, while some have argued for legalization and taxation, what those advocates will likely find is that they will find a result dramatically different from what they expected.

POKER TAX. That is right. I bet you didn’t file your poker tax return on April 15^th. What is a poker tax return? Well if you played in a real money poker game on line and had $10,000 in your account anytime during 2008 you probably have to file a Report of Foreign Bank and Financial Account, “FBAR” (TD F 90-22.1) by June 30 of 2009. Now, why you have to do that, is that some people believe that an account at an off shore on-line casino or poker site is a “financial account” for reporting purposes.

So what that means to you, is that you probably need to file FBAR’s for every year that you had an account(s) at any off shore poker site and in which you had more than $10,000 in your account at any time in the year. The statute of limitations is 6 years and the penalties are severe (see below). But don’t worry, it may get worse. If Sen. Levins’ recent Bill, S 506 “Stop Tax Have Abuse Act” is passed the $10,000 threshold will go away and if your off shore account has a $1.00 or more in it you will likely have to file and FBAR. Now for the penalties: The penalty for not filing an FBAR is 20% of the highest amount per year in the account. You can file the FBAR’s (and presumably amended returns if necessary for prior years) and make a voluntary disclosure or take your chances. A voluntary disclosure is a formal request to the Internal Revenue Service to waive prosecution and not impose penalties.

WARNING, you must make a full disclosure, file all unfiled FBARS and amend tax returns to pick-up any unreported income (and pay the tax and interest). Many Americans took chances and have accounts at UBS and the U.S. District Court in Washington D.C. will decide whether UBS has to turn over 52,000 names and account information. A U.S. District Court Colorado ruled that First Data Corporation must turn over information on credit card transactions it processed involving off-shore merchant accounts. The ultimate objective of enhanced FBAR enforcement measures and prosecutions is to raise income tax compliance by getting taxpayers to report off shore accounts and off shore income (including poker winnings) and to prevent terrorism and money laundering . Oh, I failed to mention that preparer penalties may apply to return preparers. How the IRS will collect data from off shore operators, and how to avoid or minimize penalties is the subject of future comments. So, now do you think that there is a poker tax? What are your thoughts?

Part 1 of 3 from Sanford I. Millar, the CFO and General Counsel for Centaurus Games and a certified specialist, taxation law State Bar of California. Mr. Millar will be a featured panel speaker at the Southern Gaming Summit on Thursday, May 7, where he will discuss the importance and qualifications for filing a Report of Foreign Bank and Financial Account (FBAR) and other federal tax compliance issues relating to the regulation of Internet gaming.