Poker Account Theft

The poker community has had its share of scandals this year, and now faces another, as players have to be wary of fraudulent activity. It was reported that a number of BetMGM users (and some who aren’t users) were victims of theft of up to $10,000. These payments were processed by Global Payment Gaming Solutions and are currently being investigated.

While I do not have any insight into how or why the fraud occurred, we can look at the potential tax ramifications of such an event. You might be thinking, a theft of money from my online account balance should be deductible, right? Unfortunately, for a majority of recreational gamblers, that is not the case. Since the Tax Cuts and Jobs Act was passed in 2017, there is currently no deduction for personal theft losses (unless the theft is associated with a Ponzi Scheme). Since this is considered a theft of personal funds and not a gambling loss, there is no tax benefit as a result of the incident.

However, if you are a professional gambler, there may be some relief. Since professional gamblers are self-employed, the theft now involves business funds. Businesses are entitled to deductions in certain cases for theft and embezzlement. This case, most likely, would qualify for a deduction of some kind if the money is not recovered or reimbursed. I would highly recommend reaching out to your tax professional to ensure you have the necessary documentation if this affected you.

It seems a number of players were able to recover the stolen funds. For those who haven’t, check with your tax professional to determine the deductibility of the loss.