The Canadian finance minister, Jim Flaherty, presented the federal government’s 2014 budget plan to Parliament on February 11th. Cryptocurrencies played a small part in the budget, though still an important one for Canadian businesses in the sector.
Bitcoin and other cryptocurrencies are addressed under the heading “Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime.” The relevant budget extracts are here. (The entire budget can be downloaded here.) The federal government has indicated that “virtual currencies, such as Bitcoin,” are “emerging risks” in the anti-money laundering and counter-terrorist financing world. Specifically, the government is proposing to introduce anti-money laundering and anti-terrorist financing regulations for virtual currencies, including bitcoin.
On February 11th, David George-Cosh broke the story of the release of an undated internal document produced by FinTRAC addressing the challenges of cryptocurrencies, primarily bitcoin. FinTRAC is Canada’s anti-money laundering and counter-terrorist financing watchdog. The document is a slide deck that was produced further to an Access to Information Act request. The WSJ blog post on the release is here.
A copy of the deck that was released to the public under Access to Information is here.
It’s important to remember that most of what is in this deck does not represent a normative policy position being taken by FinTRAC on cryptocurrencies. (Though note that pages 24-25 of the .pdf document fairly characterizes how FinTRAC views bitcoin vis-a-vis money services businesses under the current Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations.) I think the bulk of it represents an earnest and honest attempt to canvass available resources and learn about bitcoin. Many bitcoin aficionados might take issue with how some points are set out and the substance of others. However, I think it’s a decent overview and a good start at fairly covering a lot of ground. Over the coming months, we may see how FinTRAC uses this knowledge as they work with the Department of Finance to introduce anti-money laundering and anti-terrorist financing regulations for cryptocurrencies, as promised in the recent federal budget.
Call it lo-tech, but I bought an actual paper magazine on the way home from Christmas, Popular Science, which lured me with its cover story, “Predictions for 2014″.
Semi-fascinating stuff regarding 3-D printing, a looming crackdown on opiate painkillers, and a right-around-the-corner future filled with bots — the good kind, apparently, not ones that threaten security of the human race and sanctity of Full Tilt Poker. Anyhow, one item that was nifty-neato featured some rhetoric that sounded kinda familiar. Supposedly, according to one of the PS predictions, the drone industry is ready to boom right about now. All they need, say drone
profiteers pioneers, is to attach hole-card cams CyberChris Moneymaker a little government oversight to make sure you don’t go attaching laser death beams to go through your neighbor’s underwear drawer.
“We’re one of very few industries that is actually begging for government regulations,” says Ben Gielow, government relations manager at the Association of Unmanned Vehicle Systems International. FAA rules could potentially lead to a drone registry to help punish reckless piloting.
Exciting stuff … sounds kinda like a drone-age Pocket 5s, no? Let’s just hope (for the sake of the drone pros) that they have more success with that line than the PPA and AGA have had. Meanwhile, the government seems to be making sure this boom doesn’t get out of hand too early … starting by targeting media operations who may or may not be currently benefiting from unregulated drone piloting.
Preet Bharara, the US attorney for the Southern District of New York, today announced the unsealing of a federal criminal complaint against Robert Faiella and Charlie Shrem. It’s alleged that Faiella ran an underground bitcoin exchange on Silk Road. Shrem is well-known in the bitcoin community as the CEO of BitInstant and the Vice Chairman of the Bitcoin Foundation.
A copy of the criminal complaint against both men is here.
The complaint alleges that both Shrem and Faiella operated an unlicensed money transmitting and that Shrem specifically facilitated that business through BitInstant. Further to those allegations, Shrem is also charged with violations of the Bank Secrecy Act because of his purported wilfull failure to file reports with the Treasury Department. Finally, both men are charged with money laundering conspiracy under 18 U.S.C. 1956.
The World Series of Poker (WSOP) has made poker history, providing some of the most memorable moments to ever unfold on the green velvet. The sport has become truly captivating for audiences and participants alike, with the tournament witnessing such euphoric highs and crashing lows all at a single table.
Here are some of the best moments in the history of the WSOP event.
Annette Obrestad Becomes WSOP Youngest Winner
At the tender age of 18, Norwegian poker player Annette Obrestad became the youngest-ever person to win a WSOP bracelet. Her victory came at the inaugural WSOPE £10,000 Main Event in 2007 at the Empire Casino in London.
Obrestad defeated Welshman John Tabatabai for a first place prize of £1 million and a place in the history books, just one day before her nineteenth birthday. She went on to impress in the online world as well, when she won against 180 people in an online tournament in July 2007, having only looked at her hole cards once the entire time.
Daniel Negreanu is Named WSOP Player of the Year Twice
Last year’s race to be named WSOP Player of the Year saw Canadian pro Daniel Negreanu come up against Matt Ashton, who held the lead after cashing in the first event of the series.
Negreanu wasn’t about to give up his title to the young Brit, and he overcame a huge player pool of 80 players to scoop the €25,600 High Roller event in the 2013 WSOPE in Paris. This victory won him his second bracelet of the season and cemented him as the first player to win WSOP Player of the Year twice.
Jamie Gold Wins Largest WSOP Main Event
Jamie Gold was able to impressively manipulate his opponents during the 2006 WSOP Main Event, telling them exactly what he had in his hand and still coming out on top. Not only did his skills see him fend off the largest WSOP player pool of 8,773 participants, but he also landed the largest ever WSOP Main Event prize of $12 million.
Despite his victory, it all went south for Gold. He was sued for half his profits by a former business partner, whom he had signed an agreement with before the tournament. He was then rumoured to have hit rock bottom, with his WSOP bracelet being auctioned off.
Phil Hellmuth Bags Two WSOP Main Events on Two Continents
With the WSOP it’s not just about what you win, but where you win as well. No one knows that better than Phil Hellmuth. As the most decorated WSOP in the world, it comes as no surprise that he has also been crowned the first ever player to win WSOP Main Events on two different continents.
At the 2012 event in Cannes, 23 years after his first victory, Hellmuth overcame Ukranian Sergii Baranov to not only leave his stamp on the tournament’s history, but to add to the 13 WSOP gold bracelets and almost $18 million in live tournament earnings he had amassed during that time.
Chris Moneymaker’s Game Changing Win
Chris Moneymaker’s WSOP win in 2003 was so impressive that it’s credited as giving rise to the online poker boom of the early 2000’s, where normal people flocked to sites such as au.royalvegascasino.com to emulate his success.
Totally unknown to the media, Moneymaker won a seat in the $10,000 WSOP event via an online satellite for just $39. There, in front of millions of people watching the ESPN event coverage, Moneymaker defeated the top pros at their own game, earning a $2.5 million prize befitting of his name and inspiring crowds of players to pursue their own road to stardom.
PokerStars, the biggest most legitimate online poker site in the world, which got that way by thumbing its nose at the US government for their stupid laws, has gotten the big X in Nevada, and in New Jersey … so where to next? According to my personal Linked In recommended jobs feed, the less pokery-sounding Stars/Tilt parent Rational Group seem to be setting up shop in California, with a new open position(s?) to beef up their “social” gaming presence. Seems to make sense, with Cali kinda a holy grail as the only state, along with Texas, that could supply a profitably massive player pool. Or it could just be a play to recruit some Bay area tech talent …
Meanwhile, to catch up those of us who may have checked out for a semester, gaming law expert I. Nelson Rose explains rather succinctly the other day, in an appearance on Fox Business, where things currently stand with
Obamapoker the slow rollout of American online gambling. And, he explains, why California online poker doesn’t really stand a chance this year (even though politicians are still happy to take your donations for giving it the good-ole college try) — go 2014!
Stuff’s goin’ on …
Gone are the days when going to casino resorts with the family meant endless days spent at buffets and boring nights spent cooped up in cold hotel rooms with cranky kids and a dissatisfied spouse. These days, besides playing hosts to venerable World Series of Poker players, casinos are pretty family-centric now and gambling enthusiasts can easily planned an enjoyable vacation at their favorite gaming spots. And guess what, the wife and kids would actually be excited to go!
Check out these exciting activities you and your family to consider next year:
Winter in Venice – Las Vegas
If you’re bored of the same old Christmas spent at your mother-in-law’s place, you could have revisited Las Vegas and saw how it transformed into a totally different realm. The Venetian and The Palazzo Las Vegas hosted a celebration called Winter in Venice from November through January 5, 2014.
Accommodation and packages
Because it’s peak season, you won’t be at fault for balking at rates that are seemingly higher than normal, but if you stayed at least one night at The Venetian or The Palazzo, you and your family members could have received a Passaporto di Winter in Venice, which gave you access to discounted offers worth over $1,000. This passport of sorts allowed you to wine and dine, be pampered at spas, enjoy exciting retail therapy sessions and be entertained like never before – all within your ideal budget.
A truly Winter Christmas on the outdoor skating rink
If you’ve always wanted to know what’s it like to ice-skate, wonder no more. You could have taken a leisurely stroll to the outdoor skating rink located outside The Venice and be greeted with a most enchanting sight. Giant snowflakes and fairy lights embellished the area, dominated by a 65-feet awe-inspiring Christmas tree. What was even more impressive is that the skating rink was not made out of ice, but was created out of a specially-crafted, environmentally friendly materially called dubbed “ven-ICE”. Unlike ice, this material did not require electricity or refrigeration, and could be likened to a type of recyclable polymer that worked just as great as actual ice!
After doing several figure eights and enjoying the joyful atmosphere at the skating rink, you and your loved ones can stroll around the 65-feet Christmas tree that was decked out with the most colorful and bright LED lights. Entertainers and carollers were just a few steps away, so you could have enjoyed the music and fun that permeated the air.
A Winter in Venice Green Fantasy
Nature lovers could have revelled in the “A Winter in Venice Fantasy” showcase situated at the Waterfall Gardens, specially brought to you by the highly talented horticulture team at The Palazzo. Here, guests and visitors alike were enchanted by 20-foot frosted trees, majestic waterfalls, fresh flowering plants, hand-crafted ornaments and white-and-pearl peacock structures that culminated in a truly stunning winter wonderland.
Holiday enchantment parade and “Light of Venice” 3D light projection show
Think Mardi Gras parades are amazing? Then it was a shame that you did not manage to check out the holiday parade (led by the majestic Queen Aldabella) held nightly at the resort and marvel at the colorful characters and beautiful costumes they donned just for the celebration. After that, you could have stayed on and witnessed the “Light in Venice” 3S light projection show where the climax featured the complete and elaborated illumination of the resort plaza and its 65-foot Christmas tree.
Winter at Cotai Strip, Macau
Presented by Sands China, the “Winter at Cotai Strip” event officially started at the Cotai Strip Resorts Macau. If you want a change from the usual winter holiday scene, then you could have headed towards what was touted as Asia’s largest winter festival.
The entire outdoors spanning the resort’s property had been transformed into a wondrous winter wonderland complete with towering Christmas tree, sparkling ornaments and an ice-skating rink. There were also winter markets full of vendors who peddled their delightful Christmas-themed wares that made great last-minute presents and stocking-stuffers for loved ones.
The Dreamworks Experience
Kids were not forgotten during this event. Your young ones would have been delighted with a visit to the Dreamworks Experience at Cotai Strip Resorts Macau where you could have met, greeted and taken photos with your favorite Dreamworks characters from “Shrek”, “Madagascar” and “Kung Fu Panda” at the Paradise Gardens. There were also daily Dreamworks All Star Parade that entertained your entire family as you revelled in performances by puppeteers, dancers and stilt-walkers.
Author bio: Jeremy Henderson is an avid gamer, who also loves writing. He has for years played in poker tournaments around the world and made a living off it. He has also ghost written a number of articles that have been featured in reputed journals.
Teddy Sheringham is one of the most successful soccer players of the last half a century. His professional career lasted twenty-four years, making him one of the game’s survivors. His quality as a player earned him an MBE, presented to him by Prince Charles for services to soccer on the 20th of November 2007.
He is also father to Charlie Sheringham, who has had a successful league and non-league career, and now plays for AFC Wimbledon as a striker. Teddy too played mainly as a second striker, first for Millwall between 1983 and 1991, before moving on to Tottenham Hotspur and then Manchester United – it was whilst playing for MU that he was named PFA Player of the Year in 20001.
He retired in 2007/08, at the age of 4, spending his time improving his poker game. He is now a frequent on the world poker scene, and has racked up over $300,000 in live tournament winnings, including two World Series of Poker (WSOP) cashes. He also has a final table finish at a leg of the European Poker Tour under his belt, which netted him a cool €93,000.
Two final table appearances in the Palm Beach Big Game and a final table finish at The Ritz Club mean that he is no rookie – he has been playing seriously for the last six years, but has been playing poker throughout his adult life.
He learned to play poker in dens, hotels and on coaches, and says that he really learned to play poker by losing money. He has a tendency, like a lot of new players, to go for big hands and pairs, to be flash and cool. Now he says “it’s more about trying to figure out what other people have got, using real skill, and whether they’re bluffing. You have to think ahead.”
Luckily, since bwin started up, you don’t need to lose money to learn to play poker well. For beginners, Texas hold’em is usually considered the best starting point, you can find all the details here: poker.bwin.be/nl/texas-holdem.
You can practice hands and enter freeroll tournaments with bwin without spending anything at all – and according to most pros out there, the new guys who learn online are the best players out there. Start with free tournaments, learn the ropes, and then build up to cash games with the free bwin poker school.
All good things must come to an end, right? And if you remember Vegas Grinders, you know we were big fans of the MegaBeat Jackpot, a progressive multi-property payout. Though none of us cashed in, the promotion was enough to draw each of us (and many of you) to various Caesars property poker rooms on repeat occasion. Anyhow, promotions naturally change, and it’s been about a year that the MB was in play, but there does seem to be some decentralization going on at Caesars- and WSOP-branded poker rooms in Las Vegas — or maybe it’s more of a recentralization? — which may or may not have anything to do with different rooms getting autonomy while others prepare for the axe. Wild speculation, but we do know that email addresses have changed recently, with a promo list like the one below coming from @caesarspalace.com instead of @caesars.com … and these sorts of changes seldom happen for no good or apparent reason.
Caesars Palace January poker room promo info below:
We are having a few changes to both our tournaments and promotions starting January 11 at 12:01 am.
- We are ending our Mega Beat promotion…. Effective 1/10/14 @ 11:59pm.
- Our last 20 for 20 free roll will be this Sunday 1/5/14 @ 10am.
- We are bringing back High Hand Promotion
- Four of a Kind pays $100
- Straight Flush pays $200
- Royal Flush pays $500
- Aces and Faces Cracked (Limit games only)
- Get Aces or Kings Cracked get a $100
- Get Queens or Jacks Cracked get $50
- Starting after our Winter Poker Classic is over (January 20th, 2014) Tournament Guarantees are back!!!
- Monday – Friday Noon $110 buy-in will have a $2,000 guarantee (No guarantee on Sat. and Sun. Noon tournaments.)
- Saturday and Sunday 2pm $235 buy-in will have a $5,000 guarantee.
Event to be held opening night of the Winter furniture market
Co-Hosts hope to exceed last year’s total of $35,226!
LAS VEGAS – The Ante4Autism Co-Hosts will continue their mission to raise awareness of the disability and raise money to help fund research into the cause and cure for Autism. The 6th Annual Ante4Autism poker tournament will be held at the Golden Nugget in the “Grand” event center on Sunday, January 26th at 7 PM.
The buy-in for the Texas Hold’em poker event is only $125, with $40 re-buys available! All players will receive an Autism Speaks pin for playing! All final table players will receive great merchandise prizes for being top finishers. The winner will also receive the Grand Champion winner’s plaque! The complete details of the event are available at www.Ante4autism.com.
(L) Ante4Autism 2013 Co-Champions Poker Pro Chip Jett and James Baker look forward to defending their crown.
(R) Co-Host Allen Parvizian, with poker pros Karina and Chip Jett, welcome all to play in or sponsor the 6th Annual Ante4Autism poker tournament.
Co-Host Mike McQuiston mentioned: “The prevalence of Autism continues to rise and we must figure out why.”
“All the proceeds of the event go to Autism Speaks to fund research into the cause of Autism”, McQuiston said. “Sponsorships are available online at www.Ante4autism.com or sponsors can contact Co-Host Doug Krinsky directly at 614-554-0802 or e-mail him at ante4autism @aol.com”, he commented. Co-Host Randy Coconis, reiterated that, “There will be a silent auction at the event with outstanding entertainment and sports memorabilia items available.” Players can now register to play and donations are now being accepted online at www.Ante4autism.com.
Co-Hosts for the 6th Annual event include:
Gary Blackney, Simmons: Allen Parvizian, APJL Consulting: Myra Stone, Independent Representative: Randy Coconis, Coconis Furniture; Richie Gallaher, Tempur-Pedic; Stuart Carlitz, Eclipse International; Phil Miner, Symbol Mattress; Mike McQuiston, Symbol Mattress; Scott Graham, Trucomfortmattress.com; Jerry Williams, PMD Furniture Direct; Anthony Mehran, Huffman Koos Furniture; Joseph Amato, Mattress Matters; Mark Quinn, Leggett and Platt and Doug Krinsky, Restonic.
Co-Host Myra Stone and the entire Host committee would like to thank all of our past sponsors and companies for their donations and look forward to an even bigger and better event this year. We also want to thank the Golden Nugget for their outstanding support of our event and we look forward to them hosting us again next year.
Co-Host Scott Graham reminds us all: “Autism spectrum disorders are diagnosed now in 1 in 88 children in the United States, and 1 in 54 boys.” He commented further: “It is very important we continue to help all the families impacted by Autism in any way we can.” We hope to see everyone at the 6th Annual Ante4autism poker tournament, Sunday, January, 26th at the Golden Nugget at 7 PM!
All three of these companies’ ads are in heavy rotation on the Trenton, NJ, transit station video displays like they belong. (Take that Bill Frist!)
Georges St. Pierre pimpin’ for 888.
Betfair Casino in New Jersey offering more than just poker.
Ahh, dear old PartyPoker, welcome home.
A Canadian gambler’s license plate asks: Want to go double or nothing?
If you had cash on Full Tilt shortly before Black Friday, you’ve got until this weekend to inform government contractors that you’d like your money back, please. Check out what I got in the mail recently from the poker world’s new-good friends at Garden City Group, who are handling Full Tilt remissions on behalf of the DOJ, whom you may or may not recall earmarked nearly $200 million of PokerStars money for paying back Full Tilt player/ponzi victims.
Curious though, their effort to contact me, as my email has been the same since I signed up in 2004 … and I’m almost certain I maintained a negative balance on Tilt ever since I stopped playing there in like ’09. (According to my records I was in the red for about $300, but hey, I’m standing in solidarity with Erick Lindgren; I called “not paying!”)
Presuming I didn’t unknowingly luckbox into some sorta secret errant money transfer, I think this postcard campaign reveals a GCG serious about covering various asses should someone and their lawyer(s) can come back later and claim ignorance when trying to get a piece of any FTP payout pie. Otherwise you gotta wonder … they didn’t have my email address — the one that just about everybody remotely connected to poker has? (You know, the one that has been the same ever since signing up with Full Tilt in ’04?) And yet they were able to track me down through a postal address that didn’t even exist for me or Pokerati until after Black Friday? It wasn’t anything I ever provided to Full Tilt Poker, PokerStars, Garden City Group, nor the DOJ, as far as I know. In fact, I could be wrong here, but I think the only federal agency that would have this address for me is the IRS.
Hmm … makes you wonder what kinda sit-n-gos the NSA really might be playing!
If you haven’t yet submitted your online poker DNA to Uncle Sam and you still want a chance at seeing your Full Tilt bankroll ever again, visit http://fulltiltpokerclaims.com/.
In an interesting decision out of Montreal, the Quebec Superior Court very recently found in favour of Loto-Québec in a claim against it by two Quebec residents. A copy of the judgment is here.
The plaintiffs alleged that certain limited outputs of the algorithm used to generate lottery selections in Quebec’s ‘Extra’ lottery add-on product showed that Loto-Québec violated its own governing by-law, the Criminal Code, and provincial consumer protection legislation. Basically, the plaintiffs claimed that the tickets were not generated at random, which meant that the winners were not selected at random. They sought substantial money damages, including $10M in punitive damages.
The Superior Court roundly rejected every one of the plaintiffs’ claims. Most important, the court found that Loto-Québec generally has the discretion to conduct and administer lotteries within the parameters that it chooses. While tickets as part of the draw may or may not be produced completely at random, the winners are selected at random, and that latter quality is sufficient to meet Loto-Québec’s legal obligations.
There are plenty of good reasons to criticize the provincial lottery monopolies in Canada (poor planning, lack of innovation, the occasional scandal), but exaggerated and baseless claims about a lottery product not being sufficiently random aren’t a useful avenue of attack.
The Canada Revenue Agency (the Canadian equivalent of the IRS) just issued its first release on how it will treat virtual currencies for taxation purposes. There is not much new here — the CRA sent an e-mail to the CBC back in April about bitcoin taxation — and the government leaves several questions unanswered. Still, it’s an actual release from the CRA and not just a communication to a news outlet, which is helpful to those advising taxpayers. And even though the interpretation bulletins and the release do not have force of law, this communication does at least put up some signposts about the CRA’s thinking about bitcoin.
The release — styled one of the CRA’s fact sheets on “digital currency” – is available here.
No Canadian tax practitioner will be surprised that a bitcoin-denominated transaction will often be taxable where that transaction would be taxable without bitcoin. For example, under subsection 5(1) of the Income Tax Act, a person’s income from office or employment includes “the salary, wages and other remuneration, including gratuities, received by the taxpayer in the year.” Salary, wages, and remuneration paid and received in bitcoins are taxable under this provision, just as salary, wages, and remuneration received in US dollars, UK pounds, or Euros are taxable. (Right now I’m leaning towards treating bitcoins for most Canadian tax purposes just like any other currency — more on this below.) For good measure, section 6 of the Act sets out a whole laundry list of items that are included in office and employment income — things like free rent, housing allowances, living expenses, insurance benefits, and a standby charge on the use of company cars. If you are a resident of Canada and receive employment income in bitcoins, you’ll be taxed on it. I think similar arguments can be made for many provisions in the Act, e.g., business income and so-called ‘passive’ investment income like dividends and royalties.
But no-one had any idea until this past April how the CRA was thinking about bitcoin, when the Agency sent an e-mail to the CBC setting out its views. The recent CRA release repeats the two general bases on which bitcoins — or any virtual currency – will be subject to Canadian taxation: 1. when used as barter; and, 2. when bought and sold as a commodity. The barter rules, opines CRA, apply when virtual currency is used to pay for goods or services. The example given in the release is paying for movies using digital currency; the value of the movies, says the fact sheet, should be included in the seller’s income for tax purposes. As a general proposition, this makes sense for business-owners, whether it’s paying at a movie theatre or paying for a download on your smart TV. Or, to use another example, if I sell an e-book and accept bitcoin for the transaction, that’s revenue for accounting and tax purposes to me, provided I’m in the business of selling such things. I would also argue that, if the book purchase were an ordinary expense of the buyer’s business, then it’s a deductible expense to the buyer, whether the transaction is in bitcoin or in some other currency.
There’s an issue with the insinuation in the CBC piece and the fact sheet that any barter transaction with bitcoin is subject to taxation, though Interpretation Bulletin IT-490 (Barter Transactions) avoids this pitfall. The fact sheet says that “[a] barter transaction occurs when any two persons agree to exchange goods or services and carry out that exchange without using legal currency.” That’s true. But the release goes on to cite the movie example and reaches the blanket conclusion that the value of the movies “must be included in the seller’s income for tax purposes.” That’s not necessarily true. For barter to be taxable, it has to be a transaction involving income from a productive source. A ‘source’ includes, for instance, a disposition of property, or income from a security, a job, or a business. Gambling winnings are almost invariably not a source (with a big exception for truly professional poker players here), nor are non-business transactions between acquaintances. So if I help you move and you give me a case of beer (or some bitcoins), that’s not taxable unless I’m in the moving business. But if you pay me in bitcoins for legal advice, that is taxable to me as income from a source.
As to buying and selling bitcoins as a commodity, the fact sheet says only that “any resulting gains or losses could be taxable income or capital for the taxpayer.” This statement isn’t overbroad like the barter statement, so that’s a good starting point. Losses aren’t taxable in the hands of taxpayers; if anything, they’re deductible. What the CRA is primarily after here are people speculating in bitcoins, and they are indicating that those gains or losses may be taxable (or deductible) on account of income or capital. So-called income gains are fully includable in income in Canada, and fully taxable. Capital gains are effectively only 1/2 taxable. The whole income-capital distinction is beyond the scope of this post, but think of a capital gain or loss typically arising when you dispose of an asset that’s not inventory or production materials. That said, if you are in the business of simply buying and trading those assets, all such dispositions are more likely to be on account of income and not capital. The bottom line on income vs. capital for bitcoin: very generally, if you buy bitcoins and they sit in your bitcoin wallet, appreciate in value, and you sell them, you’ll likely be taxed on that transaction as a capital gain in Canada. If you are in the business of buying and selling bitcoins as a speculator, any gains will probably be on account of income.
While helpful, the comments do not address a key bitcoin area: how is mining to be taxed? The CRA has had nothing to say about this so far. I see the issue as whether bitcoin will be treated as a currency for mining purposes or whether it will be treated like a precious metal that is actually mined out of the ground — gold or silver, for example. Mark Goodfield, a Toronto accountant, suggests that payment for computer power in bitcoin may be like a coupon being issued by a retail store, although it seems to me that that would likely still be taxable under the barter rules, provided they are source transactions.
I said at the Future of Payments conference this past May and still believe that the CRA is making this more complicated than it needs to be. If bitcoin is treated as an actual functioning currency, then there’s no reason to have resort to the barter rules, for example, and the taxation of mining might become clearer. Transactions could be translated on the day of occurrence using some reasonable exchange rate between bitcoin and Canadian dollars. The CRA will claim that bitcoin is not a legal currency, i.e., that it hasn’t been adopted by any national government as its legal tender. That’s a point that should be addressed. Would the CRA then need to accommodate every virtual currency having the same properties as bitcoin, including its decentralized nature, the same way? What virtual currencies would the CRA treat this way, and which ones would it perceive differently? These questions are worth grappling with. More to the point, they’ll eventually have to be answered as more people participate in the bitcoin economy and report their economic activities to the tax authorities.
Do we call it gaming or gambling? I think we all know the casino industry would prefer we call it “gaming”, but for poker players that’s sometimes kinda hard when you see your heroes on the TV holding second pair and a gutshot only to be shouting “gamble gamble!” after an all-in and a call.
While some suggest gaming and gambling have already virtually converged, and others contend that no matter, the customers are different, there has been little definitive work to confirm what the Nevada Gaming Commission (and Gaming Control Board) have known all along: People are more comfortable betting real money when the activity in question is referred to as gaming, not gambling.
At least that’s the case when it comes to online wagers, according to new research set to be published in the December issue of Journal of Consumer Research. Full title: “Framing the Game: Assessing the Impact of Cultural Representations on Consumer Perceptions of Legitimacy.” (LOL academic phrasiologies.)
While this study looks at myriad forms of casino gambl, er, gaming, it takes special note of online poker. By doing a content analysis of newspaper coverage post-Black Friday, researchers found that indeed, media suddenly stopped presenting poker as an online entertainment option akin to video games and instead were presenting it using words associated with criminal pursuits.
Read below for more details about what they found, and feel free to question the credibility of any social scientist who doesn’t reference the phrase, “one time!” when talking about the relationship between cards and money.
Why Are Consumers More Likely To Participate in Online Gaming Than Gambling?
Consumers are more likely to participate in online betting if it’s called “gaming” rather than “gambling,” according to a new study in the Journal of Consumer Research.
“Changing an industry label from gambling to gaming affects what consumers, especially non-users, think of betting online,” write authors Ashlee Humphreys (Kellogg School of Management, Northwestern University) and Kathryn A. LaTour (Cornell University). “A label like gaming prompts all sorts of implicit associations like entertainment and fun, while a label like gambling can prompt seedier implicit associations like crime.”
These largely unconscious associations affect what people think of the industry and even their intention to participate, the authors explain. The process of changing perceptions, called framing, has an impact on whether or not people think the industry is socially acceptable. And framing can occur merely by changing a word.
The authors analyzed newspapers like the New York Times and Wall Street Journal for the language used to describe online betting. They analyzed coverage of “Black Friday,” April 15, 2011, when the US government shut down the three largest online betting sites. Newspapers shifted the way they described the online activity, framing it more as a crime, which led to a shift in consumer judgments about the legitimacy of online casinos, especially among non-users.
The authors conducted two experiments rto explore what causes consumers to make different judgments about gambling. They found that “rags-to-riches” or “get-rich-quick” narratives prompted a set of favorable or unfavorable implicit associations among participants. In a stronger test of their hypothesis, the authors changed only one word in the narratives—gambling or gaming—and found that the “gaming” label caused non-users to judge online betting as more legitimate. “This last experiment shows that a name change to ‘gaming’ can even prompt non-users to be more inclined to participate in online betting,” the authors add.
“Industry labeling has important implications not only for whether or not consumers find an industry acceptable,” the authors conclude. “For example, opponents to online gambling may want to be aware of the potential for social media to become a conduit for the expansion of online gambling.
Ashlee Humphreys and Kathryn A. LaTour. “Framing the Game: Assessing the Impact of Cultural Representations on Consumer Perceptions of Legitimacy.” Journal of Consumer Research: December 2013. http://ejcr.org/.
Want a sense of the new world we’re seeing here in Nevada, thanks to licensed and regulated online poker? Game-wise, the combo of WSOP.com and Ultimate Poker is still hardly a shell of the glory days of PokerStars and Full Tilt. But what is different is the way online poker is showing up around town … on billboards, TV, radio … in snail mail, on top of slot machines … I’m kinda waiting to see it show up at the 50-yard-line at Sam Boyd Stadium — because really, shouldn’t there be a WSOP.com Silver Bowl?
(Note: technically a Texas-based maker of industrial lubricants has that game locked down for three years.)
Until then, however, the WSOP is left to consider other means to present their brand (and an entire industry!) with newfound legitimacy. According to the presumably reliable delivery driver from Noble Pie Parlor in Reno, WSOP.com provided some 500 of these boxes for their handmade “New York Street”-style ‘zas.
Journalist Brian Krebs broke the news on Oct. 2 that US federal authorities shut down Silk Road, the most famous, or infamous, Tor network online contraband bazaar. Pursuant to a criminal complaint and related civil complaint and protective order, Ross William Ulbricht (a.k.a. Dread Pirate Roberts) was arrested in San Francisco as the FBI seized the Silk Road web domain and millions in bitcoin.
But given the role of BTC in Silk Road, one question I have is what this case means for bitcoin, if anything. This case may put virtual currency more front and centre for some, but I don’t think it should have much of a long-term effect on how policy-makers and regulators look at it. That’s because this is fundamentally a drug case, not a bitcoin case. Paragraph one of the criminal complaint emphasizes that the defendant and others agreed to violate the narcotics laws of the United States. Bitcoin was just one of the instrumentalities in the alleged criminal scheme: good technology used for criminal ends.
Ulbricht was charged with one count of narcotics trafficking conspiracy (undercover agents apparently procured ecstasy, cocaine, heroin, and LSD on Silk Road), one count of computer fraud conspiracy, and one count of money laundering conspiracy. A panoply of illicit goods and services were available on Silk Road, including controlled substances and other drugs, computer hacking services, and forged documents. In an allegation that may make for a future bar exam question, Ulbricht is also alleged to have used Silk Road to orchestrate a murder for hire. If the allegations are true, Ulbricht contracted with a drug dealer to murder a Silk Road vendor, paid the drug dealer, received photographic evidence of the killing, and apparently believed that the hit was successful. But apparently the murder did not in fact take place.
This is the first complaint in the matter. Given the scope of the alleged wrongdoing, subsequent amended criminal complaints expanding the charges against Ulbricht and pulling in others for distributing narcotics would be unsurprising.
A few things struck me as I read the criminal complaint. First were the bitcoin parallels to cash being used to facilitate illicit transactions. Cash (and by that I mean notes representing fiat currency) can be used in criminal enterprises. Bitcoin provides similar functionality, and potentially more so because of its purely virtual nature. At one point, the complaint postulates that “Bitcoins are not illegal in and of themselves and have known legitimate uses. [Both of those statements are true. --SH] However, bitcoins are also known to be used by cybercriminals for money-laundering purposes, given the ease with which they can be used to move money anonymously.” Setting aside the basis for such knowledge and ignoring the broad reference to anonymity, if you substitute “cash” for “bitcoins” in the second sentence and strike “cyber,” you have an equally convincing statement.
Cash can be exploited for criminal purposes, and so can bitcoin. The criminal acts — drug-dealing, murder-for-hire — should be prosecuted vigorously by law enforcement, but cash and bitcoins shouldn’t be vilified in the process. A candid and productive discussion about bitcoin acknowledges its vulnerabilities but also its tremendous power and potential for good.
The second thing I found interesting was how Silk Road essentially appropriated bitcoins and used them in a way that would surely offend some bitcoin enthusiasts. To make purchases on Silk Road, the complaint alleges that one had to fund a separate bitcoin wallet on a Silk Road server. When purchases were made, the bitcoins paid by the buyer were held in escrow pending completion of the transaction. Furthermore, Silk Road charged a commission on each and every transaction: 8-15 percent according to the complaint. I expect the concept of being forced to hold one’s own funds on another’s server, the escrow service, and 15 percent transaction fees offend many in the bitcoin community, irrespective of the nature of the things for sale on Silk Road. (For the record, if it needs to be said, I take greater umbrage at murder conspiracy than 15% commission fees.) The driving force behind bitcoin is the elimination of trust or counterparty risk in the financial sector, let alone trust in a bunch of criminals.
The larger point coming out of this is the centralization element that seems to be important in some of these criminal enterprises. Silk Road essentially tried to centralize and control the transactions in the marketplace, in part to hide them. Consider the Liberty Reserve indictment from earlier this year, also out of the Southern District of New York, where the enterprise created its own centralized currency, to both control it and obfuscate transactions using LR. It seems obvious, but it’s worth stating: criminal elements may often prefer to centralize and control their activities, precisely because they want to hide from law enforcement within some trusted circle. Bitcoin’s nature abhors this centralization and oftentimes, though not always, leaves a public transactional record on the blockchain.
Finally, some of the errors about bitcoin and what it does and doesn’t do in the complaint were disappointing, if not wholly surprising, to see. For example, not all bitcoin transactions are or need be recorded on the blockchain. (This cuts against the point I made above re: public notification of blockchain transactions.) Bitcoins are not an “anonymous” form of digital currency. A blanket conclusion of that sort is an overreach in the context of research that’s been done on bitcoin and anonymity (also here). These misconceptions about bitcoin are perhaps the biggest problem that the Ulbricht case poses for the virtual currency in the short term. Policy makers may well judge and seek to regulate people in the bitcoin space based on what they think they already know, whether their knowledge is or isn’t complete. Then again, some believe shutting down illicit sites like Silk Road could actually make people more comfortable with bitcoin as it “weeds out” the criminal element from the bitcoin space.
Silk Road has been in the crosshairs for some time. It’s even been discussed in Congress. It should be shut down. But this case tells us very little about how to regulate those using bitcoin.
Pokerati contributor Stu Hoegner was one of the first attorneys in North America to accept bitcoin as a means of payment. Follow him on Twitter @GamingCounsel.
Some people in Congress believe American Indians struck it rich with the establishment of tribal gaming and the passage of the Indian Gaming Regulatory Act in the late 1980s.
But serious problems with education, health care, unemployment and housing remain. Tribes are also dealing with the effect of Internet gaming on their business, off-reservation casinos and political gridlock in Washington, D.C.
“They’ve been very busy in Washington this year,” John Gusik, founding partner of the Franklin Partnership, a Washington, D.C., law and government relations services firm, said Thursday at the Global Gaming Expo. He was moderating a panel discussion on tribal gaming on the final day of the expo at the Sands Expo and Convention Center in Las Vegas.
“There have been 4,500 bills in Congress this year; only 31 have been enacted,” Gusik said. “It’s a do-nothing Congress. Seventy-two bills dealing with tribal issues and none have been enacted. Internet gaming continues to languish in Congress.”
The fate of those bills has also been hurt by the Oct. 1 deadline to enact a budget or face a possible federal government shutdown.
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Pete Kirkham, president of Red Maple Consulting, a Springfield, Va., government affairs and political strategy firm, said Congress hasn’t passed any of the 13 appropriation bills needed to fund the government.
“If you represent tribes, they think you must work on Indian gaming all the time,” Kirkham said. “Gaming takes up some time but it’s also about health care, education and housing.”
Kirkham acknowledged that the vast majority of a tribe’s revenue is earned through gaming, but said those dollars go to providing services to the community.
The National Indian Gaming Commission reported $27.9 billion in gaming revenues in 2012, up 2.6 percent from $27.2 billion in 2011.
“Everything is now seen through the prism of gaming,” said Jana McKeag, president of Lowry Strategies, an Alexandria, Va., government and public affairs consulting firm. “Congress believes that tribes have all this gaming money … why do they need (federal dollars)?”
McKeag noted that gaming revenue was a replacement for “a tax base.”
Eddie Ayoob, a partner with Indianapolis-based law firm Barnes & Thornburg, and John Harte, a member of the Washington D.C., consultancy Mapetsi Policy Group, also participated in the hourlong discussion.
The trend toward off-reservation casinos, including the North Fork Rancheria of Mono Indians in California and a Tohono O’odham casino in Arizona, was one of the issues discussed by the panel.
The North Fork Rancheria, a project that will be managed by Station Casinos Inc. outside of Fresno, Calif., has won state and federal approval, but has yet to be approved by the Bureau of Indian Affairs.
The 9th Circuit Court of Appeals has ordered the Obama administration to take a second look at the Tohono O’odham Nation off-reservation site. The bureau placed the 54 acres near Glendale, Ariz., in trust for the tribe.
“This was not the intent of IGRA,” McKeag said. “It’s a very slippery slope. I understand they are trying to bring economic development, but it’s a disadvantage for the tribes that played by the rules.”
While off-reservation casinos are a threat to on-reservation casinos, Internet cafés are a growing threat to the overall health of the industry. McKeag said the cafés have mostly popped up in strip malls in Florida, California and North Carolina.
“In California, for example, they are illegal but the state has no money to shut them down,” McKeag said. “They are not regulated and are an opportunity for money laundering. The problem is if they shut them down, they just pop up somewhere else.”
Kirkham expressed frustration that “only big bills” are moving through Congress. He said that will make it especially difficult for any Internet gaming bill to pass in the House and Senate.
“Our job is to get to 60 and 218,” Kirkham said. “Sixty (votes) in the Senate to get something passed and 218 (votes) in the House.”
Follow reporter Chris Sieroty on Twitter @sierotyfeatures.