WSOP Ends Single-Table Satellites; New Tax Reporting Guidelines for Mega Satellites

The 2023 World Series of Poker is just over a month away. It came as a surprise to many that single-table satellites will no longer be offered throughout the series. Was it a tax reporting issue? We know the IRS has been concerned with the issuance of lammers for years (and was likely the reason the WSOP cracked down on the sale of lammers in 2021). While we don’t know the exact reasoning, we do know these satellites won’t be running in 2023, which will free up more tables for mega satellites.

With the end of single-table satellites also comes the end of the $500 lammer. If you cash a mega satellite, how will you be paid? Thanks to Kevin Mathers, we know payouts will work like this:

• Satellites with a seat value less than $5,000 will award casino chips (the same chips used for cash games) to all winners. There may be certain events that award direct-entry seats as well.

• Satellites into any event with a $10,000 buy-in will award casino chips OR a direct-entry, non-transferrable seat into the event.

• Satellites into any event with a $25,000 buy-in (or higher) will award a direct-entry, non-transferrable seat into the event.

What are the tax implications of this new payout format?

As a player, you will not receive a W-2G for any winnings below the IRS minimum reporting threshold (more than $5,000 after deducting original buy-in). You also won’t receive a W-2G if you choose any of the direct-entry seats, regardless of the value of the seat. The only payout that will trigger a W-2G is when the player is paid in casino chips for any amount over the $5,000 threshold. A win of this nature would follow the traditional tournament cash-out process and a W-2G would be issued at the cage when redeeming the value of your payout.

You might be thinking, well this isn’t so bad! I don’t need to report any gambling winnings from direct-entry seats or winnings under $5,000 since I won’t receive a tax form. Not quite.

All gambling winnings need to be reported on your tax return, even if they are below the $5,000 tournament reporting threshold. This has not changed and is not affected by the new payout structure introduced by the WSOP for 2023.

The option to choose between a direct-entry seat or casino chips (for live satellites) is new for 2023. Any time a player has the option to choose between a seat and casino chips, the value of the seat must be reported as gambling winnings. It does not matter which option you choose. The option to “cash out” in casino chips assigns a direct (and liquid) value to the winnings and they must be reported as such on your tax return.

However, if there is not an option for casino chips (only a direct-entry seat in the $25,000+ events) the value of the seat is not recognized as gambling winnings.

Scenario 1: You enter a $500 mega satellite and win the option to choose between a $10,000 seat or casino chips. You choose the option to receive $10,000 in casino chips.

You will receive a W-2G from the WSOP for $9,500. Since the satellite (like any other tournament) is considered a single session, you would report the net result of $9,500 as gambling winnings.

Scenario 2: You enter a $500 mega satellite and win the option to choose between a $10,000 seat or casino chips. You choose the $10,000 seat and play the Main Event. You do not cash in the Main Event.

You will not receive a W-2G from the WSOP. Since there are two “unique” sessions, you would report the result of each separately. You would report $9,500 in gambling winnings and $10,000 in gambling losses. 

Scenario 3: You enter a $500 mega satellite and win the option to choose between a $10,000 seat or casino chips. You choose the $10,000 seat and play the Main Event. You cash in the Main Event for $50,000.

You will not receive a W-2G from the WSOP for your satellite win, but you will receive a W-2G for your Main Event score for $40,000. Since there are two “unique” sessions, you would report the result of each separately. You would report gambling winnings of $49,500 ($9,500 from the satellite + $40,000 from the main event).

Scenario 4: You enter a $500 mega satellite and win a direct-entry seat to a $25,000 event. There is no option to receive casino chips. You do not cash the event.

You will not receive a W-2G from the WSOP for your satellite win. Since the satellite and corresponding $25,000+ event are considered one session, you would report the net result of $500 as a gambling loss.

Scenario 5: You enter a $500 mega satellite and win a direct-entry seat to a $25,000 event. There is no option to receive casino chips. You cash the event for $100,000.

You will not receive a W-2G from the WSOP for your satellite win, but you will receive a W-2G for your event score for $75,000. Since the satellite and event are considered one session, you would report the net result of $99,500 as gambling winnings.

Things can get a bit tricky, especially when selling or swapping action within these events. The best thing to do is track everything you do while at the WSOP. Even if you are unsure of the tax treatment of certain winnings or losses, detailed records can be provided to your tax professional to ensure everything is being reported properly.