Poker and taxes | A happy hand for the taxman with online gambling

After lying against the ex-king of poker Jonathan Duhamel, the Canadian tax authorities had a lucky hand with another professional player who got rich through online gambling. The game is not yet over, since the main interested party wants to appeal the decision of the Tax Court of Canada (TCC).

Why is there a difference between the former world poker champion – who measured himself against other experts in organized tournaments – and Martin Fournier-Giguère? He had put in place strategies to maximize his online earnings against less talented and experienced players, ruled the court.

Thus, the dollars pocketed are the income of a company rather than the result of chance, considers the judge Réal Favreau, in his decision rendered last fall.

“He had strategies that he adapted according to the levels of tables and the strength of his opponents, writes the magistrate. He used software that allowed him to obtain statistical information on the playing tendencies of his opponents. »

In Canada, winnings on games of chance are not taxable, mainly because the offer is administered by the state – Loto-Québec, for example. If a taxpayer plays poker so seriously that he operates a business, he must pay taxes on the income it generates.

The CCI describes Mr. Fournier-Giguère as a “serious businessman” who “played poker to win”, which is a game-changer.

This would have earned a profit estimated at 1.7 million by the tax authorities over a period of four years (from 2008 to 2012).

A trio of players

Mr. Fournier-Giguère is not the only taxpayer to compete with the Canada Revenue Agency (CRA) in online poker. Philippe D’Auteuil and Antoine Bérubé, who know Mr. Fournier-Giguère, are also in the crosshairs of the Canadian tax authorities. The disputes were heard in September 2021 by the ICC. Decisions are still awaited in the files of MM. D’Auteuil and Bérubé.

They are being asked for a total of 3.75 million for the fiscal years 2008 to 2012. Mr. Fournier-Giguère will have to pay tax – at the federal rate of approximately 25% – on a sum of 1.2 million. Revenu Québec could also tax this taxpayer at the rate of approximately 25%. Litigation is pending before the Court of Quebec.

In an exchange with The Press, Friday, Mr. Fournier-Giguère did not want to comment on the decision of the CCI. He said a notice of appeal was filed last month. The CRA did not respond to questions from The Press.

“It was time for a court to say that there are still limits with gambling,” said Université Laval tax law professor André Lareau. The more money you make, the more time you spend playing with an organized system, it becomes a business. »

Case by case

Mr. Duhamel had become a world star of the game following his victory in the World Series of poker. He had pocketed 8.9 million US. After a long dispute with the CRA, he won his case. The CCI had notably concluded that the activities of the ex-poker champion did not demonstrate an ability to generate profits and that there was a probability of ruin “well above 50%”.

Before the ICC, Mr. Fournier-Giguère pleaded that his ability to generate profits was “unpredictable and unstable”. He played at up to 12 tables simultaneously and sometimes under the influence of alcohol and drugs. This prevented him from “controlling his behavior”.

These arguments did not convince Judge Favreau. The magistrate points out that the taxpayer analyzed his statistics and counted his earnings using software. Thus, the evidence shows that Mr. Fournier-Giguère “used his expertise and skills to earn a living in poker, a game of chance where skill is a major factor”.

The judge also considers that there is no “incompatibility” between his decision and that concerning Mr. Duhamel. “Each case is unique,” ​​he writes.

“If you make thousands of dollars a year, you might have to pay taxes, but if you go from 25 to 30 hours a week and lose $150,000 a year, well I think you can deduct our losses, adds Professor Lareau. But for a few thousand dollars, we remain in the register of chance. »

For a reason that is not explained in his decision, Judge Favreau rejected the sum of $250,679 that the CRA wanted to add to Mr. Fournier-Giguère’s income in 2008. For the 2011 tax year, he reduced the sum of $279,830. This is the profit that the latter had made by financing 5% of Jonathan Duhamel’s entry fees to the 2010 World Series.