Untaxed wins lure students to illegal gambling

http://www.dailynebraskan.com/vnews/display.v/ART/2004/10/20/4175e777c0080

Untaxed wins lure students to illegal gambling
By Katie Backman / Daily Nebraskan
October 20, 2004

Pat earns at least $200 a week. It just depends on the luck he has in his poker game.

The University of Nebraska-Lincoln political science and communications studies major plays poker with a group of friends about three times a week. Like other students, he doesn’t register his winnings on a tax form.

Pat, who said he didn’t want his last name published, realizes he could be punished for his actions.

He could face punishment from UNL Student Judicial Affairs, state legal officials and Internal Revenue Services agents.

But Pat won’t – and can’t –stop gambling.

He gambles to pay for some of his student bills, insurance bills or just for a night on the town.

To him, the money is free and he has a good time winning it.

Donna Migazzi, an Internal Revenue Services spokeswoman, said Pat’s gambling habits could be classified as a form of tax fraud.

She said the IRS has a W-2G tax form which gamblers use to register each winning, so the money can be accounted for and taxed.

Lack of a tax record doesn’t deter the IRS from prosecuting those hiding their gambling winnings.

“We have many vehicles to get information about unreported sources of income,” she said.

When people gamble at non-online casinos, a W-2G form is sent to the gambler and an IRS agency, said Harrah’s spokesman David Strow.

“We are very familiar with the W-2G form,” he said. “Anyone who works at a casino should be aware of it.”

But a representative from Casino-on-Net, a gambling Web site, said the site doesn’t use the W-2G form because some gamblers aren’t U.S. citizens.

The loophole is how Pat sneaks past taxing rules. Online casinos don’t use the necessary tax forms, and he’s not about to fill out one voluntarily.

“Only a person who has an IRS agent for a dad would register his winnings,” Pat said.

Another UNL student, who didn’t want to reveal his name, said he won $17,000 last summer while gambling.

The money was earned specifically to pay for college.

“I made enough money to pay for my tuition,” he said. “I am paying for school through poker.”

Some nights, while playing online, the student has lost $1,000.

Other nights he wins even more money back.

“Poker takes a minute to learn, but a lifetime to master,” said the student. “That is what I want to try to do in my life.”

The IRS is ready to crack down on Internet gambling. IRS officials plan to investigate online gamblers, said Kevin Jimerson, a spokesman with the IRS.

If charged, those who did not obey tax laws could be taxed for the unreported money or face three to five years of jail time, he said.

For students, the consequences of being caught don’t end with the IRS.

Pat also flirts with punishment from UNL officials. Most of his poker games are held at residence halls or fraternities, meaning the behavior could violate the Student Code of Conduct.

Matthew Hecker, director of Student Judicial Affairs, said students could receive academic probation if they don’t heed warnings to quit gambling, or if they are caught hosting a large poker tournament.

He said the severity of punishments vary, depending on the individual setting and the students.

“Generally a small group of friends playing poker or betting on a football game never create a problem,” Hecker said.

But Pat’s not worried about university trouble.

During poker games, Pat said sometimes resident assistants ask if his group is playing for money. He just lies, he said.

Recently, he and his friends hosted a 23-person poker tournament with a $20 buy-in at a residence hall.

“We had people in different dorm rooms and lounges playing,” he said.

“We didn’t get caught.”

Ina Luhring, coordinator for residence hall administration, said when students sign their residence hall contract, they are also signing an agreement to the UNL Housing Policy.

She said the policy states that gambling is not allowed at any university housing locations.

“Students have rights and responsibilities in the dorms,” she said. “They have the right to sleep and study and the responsibility to know the polices.”

Evan Brittenham, a former UNL student, said the gambling polices at the university didn’t stop him.

When he gambled, he said he used to earn $150 a week. He said the money helped him pay his bills.

“I have a job now and it is a steadier income than gambling,” Brittenham said.

Brittenham doesn’t gamble as often because he lost interest, he said. However, he realized how serious the state punishments could be.

If state officials caught a gambler, he or she could be charged with a misdemeanor or felony, said Capt. Carl Oestmann of the UNL Police Department.

According to the state statue, gambling with $1,000 or more carries a first-degree charge. The first-time offense is a Class I misdemeanor. After each offense, the punishments rise to different classes of felonies that all mean jail time.

Earning less than $1,000 from gambling carries a second-degree charge, and the offender would receive a Class II misdemeanor, he said.

Oestmann said for a third-degree charge, or a gambler winning $300 or less, results in a Class IV misdemeanor.

Oestmann said people should understand gambling is illegal and they will be punished.

Despite all the legal issues Pat could face, he still won’t quit. He said he planned to gamble next week – without reporting the money to the IRS.

“It’s hard trying not to play,” Pat said, “because it’s just 10 bucks, and I could win 50 bucks.”