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September 1, 2014

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Online poker tourney winners reap benefits of low profile

One of the world's largest poker tournaments has just concluded, awarding nearly $13 million in prize money to 1,972 people.

Yet the winners of these events may never be known to the public.

The World Championship of Online Poker, an event hosted by the Costa Rica-based Internet site PokerStars.com, is by far the world's largest online poker tournament. The top prize in the final event, a game of no-limit hold 'em with a $2,500 buy-in, was $577,342 and went to Pennsylvania player "Panella86." Second and third, "Vendetta" and "tralala" are from Sweden and won $573,735 and $540,877, respectively.

These aren't real names, of course, but screen names chosen by players to disguise their identities.

In fourth place, Las Vegan "PICKLED EGG" won $242,775. "Buster Love, also from Las Vegas, won $56,025 for ninth place.

A spokesman for PokerStars.com declined to reveal the winners' real names, citing confidentiality agreements with players.

While poker tournament winners in casinos become celebrities and receive extensive press coverage, Internet gambling tournaments are still a relatively underground event.

Nevada law makes Internet gambling illegal, and the Department of Justice says federal law makes it illegal nationwide. But attorneys say that's not the main reason why players wish to remain anonymous.

By keeping their names out of the public eye, players can try to avoid paying federal taxes on gambling winnings, they say. Unlike land-based casinos in the United States, offshore Internet gambling companies aren't obligated to provide tax forms to people who win large jackpots.

Americans who win money in other countries still must declare gambling winnings as part of their gross income, said Steve Johnson, a tax expert and the Wiegand Professor of law at UNLV's Boyd School of Law.

"If the individual chooses not to report on the return the government doesn't often find out about it," Johnson said. "But if the government finds out any time in the person's lifetime then the whole sky falls down on this guy.

"It's a matter of assessing the risk factor," he said. "I would think people gambling online aren't the most risk averse."

The IRS has ways of finding out people who don't report winnings. The government offers rewards for informants and could also end up auditing someone's return for other reasons and finding out a person is living well above their income level, Johnson said.

There's also bragging rights to consider.

"You don't feel superior until you tell others about it," Johnson said.

Joseph Kelly, an Internet gambling expert and law professor at State University of New York College at Buffalo, said players have little to worry about apart from the IRS.

Only a few states have laws that prohibit Internet gambling and even then, some only finger the operator and not the player, Kelly said. Even the Department of Justice, which has threatened online casinos with prosecution, has said that casual bettors aren't violating the law when they gamble online, he said.

Only one state, North Dakota, has actually prosecuted a player for gambling online, Kelly said.

But that won't get the IRS off a player's back.

"You're playing with fire when you don't declare that you've won and you win a huge amount of money," Kelly said.

Single individuals who earn more than $326,000 are subject to the top tax rate of 35 percent.

The 15-day PokerStars.com tournament, which featured one poker game per day, attracted 19,727 players representing 82 countries -- making the event the most geographically diverse tournament around.

After nearly 14 hours of play, the finalists of the final hold 'em event agreed to split the pot between them so they each would receive more than $500,000, organizers said.

Many of the players won their entry fees into the tournament events through satellite tournaments online that cost as little as $5.50, they said. Other players earned free seats into satellites using "player points" accumulated by gambling at PokerStars.com. The site awarded more than $1 million in entries to players, organizers said.

Contestants included PokerStars.com pitchmen Chris Moneymaker and Greg Raymer. Moneymaker and Raymer were the 2003 and 2004 winners, respectively, of the World Series of Poker casino tournament in Las Vegas.

Some disguises were catchier than others. The No. 5 winner was simply listed as "aaaaaaaa" and No. 15 was "1011000." But No. 16 was "dirkdiggler9" after the name of the porn star in the film Boogie Nights, No. 37 was "SLY STONE" after the soul band leader and No. 47, "G. COSTANZA," is a likely reference to George Costanza, a lead character on the sitcom "Seinfeld."

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