Carpe Diem, a blog recently brought to my attention (thanks Justin) has a sadly hilarious post on the World Series of Poker champion:
The World Series of Poker ended this week at the Rio Hotel and Casino in Las Vegas, and Denmark's Peter Eastgate became the youngest-ever winner of the world title. He is very much the new breed of player: 22 years old, Danish, mathematically brilliant, who gave up a fledgling career in accounting to "turn pro."
As the winner of the main event Peter won about $9.2 million, but would he actually end up with all that money?
Denmark's tax rate is 45% on the first 4 million Danish Kroners (about $680,000) and 75% on income above that. Mr. Eastgate will owe about $6.7 million in Danish taxes, and will get to keep only $2.5 million of his winnings—just 27.23% of his prize. In other words, he faces an effective tax rate of 72.77%. Ouch.
Ivan Demidov of Moscow finished second and won $5.8 million. Russia has a 13% flat tax rate, so Mr. Demidov will owe about $755,247 to the State Taxation Service of Russia. After taxes, Ivan will still have more than $5 million, more than twice as much as the first place Danish winner.
While these numbers are correct, you must take into account some other factors that make Peter Eastgate's victory more desirable than, say, a lower tax bracket.
ReplyDelete1. Winning the WSOP (No Limit Hold-'Em) means 10-20 million dollars of endorsements for the winning player. You know, to cover retirement and stuff. These endorsements in the future mean that Eastgate's sponsors will cover all of his buy-ins into big money, multi-table tournaments. Translated: For the rest of his career, companies will pay Eastgate to wear their clothes and win money. . .for himself.
2. Winning the main event brings you huge prestige, which means people will invite you to play in their celebrity tournaments (which involve really big money) and you will always get camera time in future events, as opposed to the people who place second (ever heard of Gary Berland or Frank Henderson? No? Well they were one hand away from being Doyle Brunson and Jonny Chan, respectively. I bet you've heard of those two fellas).
3. It's all about the bracelet. These guys are already professional poker players--they don't need more money. Ivan Demidov would trade all of his 5.0 mil for Eastgate if it meant he could have that bracelet on his wrist.
4. The psychological factor: Poker is at least 70% psychology because, on a long enough time-line, everyone's hands are equal. The only people who finished second and then came back to win it all were Walter "Puggy" Pearson and Johnny Moss . . . when there were a 8 and 16 entrants into the WSOP, respectively. In contrast, multiple winners of the bracelet have come back and repeated a victory including Doyle, Jonny and Stu Ungar (Ungar won it 3 times). Also, winners of the bracelet have come back and cashed the most of any player in toto (probably because when Doyle bets into you, you get the heck out of the way because he is intimidating).
Summary: Gimme that bracelet.
Perhaps I do have too much spare time.
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