Poker News

A new bill has been filed on behalf of the Nevada Gaming Control Board (NGCB) in the State Senate that could effectively end the practice in poker known as ‘staking.’

Senate Bill 40 (SB 40) was filed on December 20 to “prohibit certain acts related to wagering,” naturally something that would be covered by the NGCB. The proposed bill states that “existing gaming law provides that it is unlawful for a person to perform certain actions related to gaming without having first procured, and thereafter maintaining, all required gaming licenses.” The bill goes on to state that a person cannot “receive any compensation or reward, or any percentage or share of the money or property played for” from “facilitating a bet (on a) future contingent event without the (proper licensing).” According to the NGCB regulations, violators of the proposed law would be subject to charges as a Class B felony.

The new law (if passed) would put a new clause into Chapter 465 of the Nevada Revised Statutes that states the following:

1.  Except as otherwise provided by law, it is unlawful for a person to receive, directly or indirectly, any compensation or reward, or any percentage or share of the money or property played, for:

(a) Accepting or facilitating any bet or wager upon the result of any race, sporting event or future contingent event without having first procured, and thereafter maintaining in effect, all federal, state, county and municipal gaming licenses as required by statute, regulation or ordinance or by the governing body of any unincorporated town.

(b) Accepting or facilitating any bet or wager that is placed with or on behalf of a person described in paragraph (a).

(c) Transmitting or delivering anything of value resulting from a bet or wager to a person who has placed a bet or wager with or on behalf of a person described in paragraph (a).

2. A person who violates any provision of this section is guilty of a category B felony and shall be punished by imprisonment in the state prison for a minimum term of not less than 1 year and a maximum term of not more than 6 years, or by a fine of not more than $5,000, or by both fine and imprisonment.

This basically means that the practice of staking in poker would be outlawed. Staking – in which a ‘backer’ gives either a percentage of or the entire buy-in for a player (‘horse’) in exchange for a piece of whatever the player wins – has been a part of the world of poker probably since riverboats cruised on the Mississippi River. Under these new regulations, a ‘backer’ would have to be properly licensed by the NGCB (and maintain that license) to be allowed to stake his ‘horse’ in a tournament or cash game.

Why would the NGCB move to make the practice of staking illegal? In the past couple of years, the Internal Revenue Service (IRS) and other federal agencies began a crackdown on big money that enters and exits the casino properties in Nevada. In 2013, the Las Vegas Sands Corporation settled a case with federal agents (for $47 million) regarding the movement of money by Zhenli Ye Gon, who was alleged by the U. S. Department of Justice to be a drug trafficker and was using the Venetian (an LVSC property) to launder his money. “All companies, especially casinos, are now on notice that America’s anti-money laundering laws apply to all people and every corporation, even if that company risks losing its most profitable customer,” U. S. Attorney André Birotte Jr. said at the time. By closing the staking loophole in their current regulations, the NGCB is following federal laws and attempting to protect the casinos from federal authorities.

If SB 40 does make its way into law, the effect it might have on many of the world’s largest poker tournaments that are played in Nevada is mixed. On one extreme, if players couldn’t get ‘backing’ to participate in a tournament, they would have to use money out of their own pocket. This could have an effect on the larger buy-in tournaments, bringing down the player numbers because prospective players couldn’t muster the entry fee on their own.

The extreme to the other side is that the practice of staking would continue but be pushed further into the underground. Instead of backers picking up their piece of a ‘horse’s’ win directly from the casino, the winning player would be responsible for the entirety of the tax load on said winnings. It would then be up to that winning player to deduct the correct amount in taxes from the percentage given to the backer so that the tax load doesn’t exceed what the winning player actually made from their victory. For example, it is rumored that 2012 “Big One for One Drop” winner Antonio Esfandiari had only a 10-20% stake of his own money in the tournament; after winning $18 million, his immediate tax burden (payment to the IRS before he even received what was left of his winnings) was approximately $4.5 million, more than he would have left from his winnings after paying off his backers.

Whether SB 40 effectively ends staking in poker tournaments or pushes it farther underground (or, as with most things in life, a middle ground) is a question that doesn’t have to be considered at this point. The bill is still in its infancy and, without a matching bill in the Nevada Assembly to partner with, it doesn’t yet have enough legs to pass through both chambers of the Nevada Legislature. It also isn’t known what position Governor Brian Sandoval would take on the proposed bill. The legislation does bear watching, however, as the potential impact on the poker world could be severe.

5 Comments

  1. Clownboy says:

    If I’m reading this right this bill would go way beyond interfering with staking poker. It sounds like if I called my friend who is in Vegas for the Super Bowl and asked him to put $20 on the Seahawks to win we could both be looking at prison time. Completely ridiculous.

  2. Earl Burton says:

    Hello Clown,

    Yes, you are correct in your reading of the proposed bill. In fact, this is the major reason for the bill is to curb some sports betting activities. The bill, as written, is too wide-ranging to be passed in its current form, in my opinion.

    Thanks for reading!

    EB

  3. PummelD says:

    This would also hurt people who play as a group and send one person to the wsop on behalf of the group.

    While I understand wanting to remove money launderers there should be a better way to do it. We seem to create ridiculous laws that end up making criminals out of ordinary citizens who have absolutely nothing to do with criminal behavior.

    Just another way to promote the lessening of our liberty. If they know this is a problem they can easily identify the backers who have man horses and harass them about the legitimacy of the money. To cast a large net like this is a complete violation of people’s rights to engage in activities without such scrutiny.

    Just because someone can use a tool to act in a criminal way should not become another legislative weapon against citizens. What a joke this country is. Between this and citizen seizure we really need to understand that our freedoms are at stake and the government is abusing people for nothing more than creating an environment of fear and revenue enhancement.

  4. Arby says:

    The USA is far from being the freest country in the world. Corporate fascism is on the rise.

  5. Earl Burton says:

    Hello Arby,

    As we found out later, the chairman of the NGCB made an explicit point to state that the bill was NOT going to affect staking.

    http://www.pokernewsdaily.com/ngcb-chairman-firmly-states-that-sb-40-doesnt-apply-to-poker-26685/

    Always good to be vigilant, though!

    Thanks for reading!

    EB

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