The Isle Casino and Racing in Pompano Beach, Florida recently filed suit against the Florida Division of Pari-Mutuel Wagering due to its new interpretation of a state statute that could raise taxes on poker dealers’ tips. Isle attorney Jack M. Skelding Jr. called the recent policy change “arbitrary and capricious” and said the rule is “an invalid exercise of delegated legislative authority.” The lawsuit also stated that poker tournament chips have no cash value and therefore the Isle receives no monetary benefit from the gratuity.
The change became official at Florida’s 23 poker rooms on July 21, although division officials had been discussing counting tip money as poker room income since 2012. They said poker room managers knew that the change was being considered. Poker generated $13.6 million in tax revenue from tournament and cash-game play in the last fiscal year.
Ever since Florida legalized poker in 1997, tournament players have routinely tacked on a “dealer add-on” of $20 for 3,000 more tournament chips, for example, before a tournament began. Until the rule went into effect two weeks ago, that money did not count as poker room income and was not subject to the state’s 10 percent tax on all card room revenues. Experts said project the added tax on the largest card rooms, such as the Isle and the Palm Beach Kennel Club, could total hundreds of thousands of dollars annually.
The new rules do allow tips to go directly to the dealers if players do not receive a chip bonus. The dealers then are required to report the tips as income just like wages. Gambling attorney John Lockwood said, “That’s going to be a negative for the card room dealers. They’re paying the price on this. I’m unaware of any other jurisdiction that does it in this way.”
Some card room managers said they simply will adjust the buy-in to tournaments to pay dealers more.
