S-Corporation VP Player, and Wynn kicking winners out.

http://forumserver.twoplustwo.com/showflat.php?Cat=0&Number=9475533&page=0&fpart=all&vc=1

Letting any casino (and particularly Wynn) know that you are not playing
strictly recreationally is suicide and extremely naive. Indeed, if you are
playing a winning game (or even just their full-pay vp machines), Wynn will soon
make it impossible for you to play vp there with any hope of positive
expectation--if they allow you to continue to play at all, or even return to the
premises.
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I disagree, the Wynn is actually trying to attract professional gamblers with an
edge such as Denny who are hoping to profit using short term fluctuations in
games that have a 98% payout when playing optimally. Remember the Wynn expects
to keep 2% of his total play in the long run, VPoker is a -EV game after all
therefore theoretically if Denny is pumping in 50,000 per hand and playing 250
games per hour Denny is providing 125,000 in action per hour, which in turn
means Wynn's long term expectation is 2.5k/hour. Of course a 5 hour session is a
theoretical 10k earn for Wynn, and 1/2 mil in action from Danny. By design Wynn
is set up to encourage this action from a VP professional, although they may
change their mind if Denny happens to hit a short term fluctuation of a huge
score (Bob Dancer was asked to leave after he hit an 80k payout recently).
Casinos such as Wynn can now tell if a player is playing optimally through
software, therefore disclosing that he is an advantage player is no longer the
risk it used to be - provided you are giving the level of action that Danny does
and the Casino is prepared to accept its risk of standard deviation.

Denny: Did you get Dancer's new software tool, Video Poker for Winners?

TT
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First of all, Denny is not a professional gamber and is not playing with an
edge. Secondly, Wynn is certainly not trying to attract professional gamblers
who play with an edge. I know dozens who have been 86'd from the premises but
would stampede the joint if amnesty were declared. I was 86'd and escorted off
the premises by about a dozen security guards--unbelievable overkill,
considering that I was quietly playing a game with an edge. I've read reports of
many vp players who were 86'd for simply playing only the -ev vp machines that
became slightly positive with cashback and comps.

Your view of Wynn's attitude toward anyone playing with an edge on their
premises is terribly naive and misleading to readers. Wynn may welcome
professional poker players but is very intolerant of anyone who is legally using
skill to take the casino's money.

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Last year I started playing higher stakes Video poker as a visitor to Vegas 6
times a year. I played for a number of years before for small stakes. I come
from a state where gambling losses are not deductable from winnings. I have read
all the Dancer, Dancer Dailey Guides and everyone else's books on VP and have
the Zamzow and Dancer software. I now generally play $25.00 single play or $1.00
100 play machines at WYNN where I am RFB. I happened to earn enough money last
year gambling for me to hire a tax accountant. I am a retirerd Auto exec with
advanced degrees in Engineering and Business.
I do not consider myself stricltly an advantage player as I do not play an
infinite number of hands or any number of hands somewhat less than infinity so I
have a relatively short run outlook. I do start with optimal play, but I play
the cycles as they occur where I run my winnings and put stop losses on my
sessions on any given machine. I have just finished a VP book by a Dr. Crowder
who seems to recommend the same kind of thing. I also practice advantage player
heresy by believing some, not all, of Ron Singer's philosophy.
The tax accountant I hired was not well versed in gambling taxation but is
learning with me. We have gathered and read all we can on gambling taxation
including the recent Ferguson court case disallowing the player who never wins
from filing as a Subchapter S Corporation. Before I went to Vegas last month my
accountant advised me to fill out the papers to become an S Corporation and get
an EIN tax number and then open bank accounts for the Corporation. He believes
this is a better method for tax purposes than filing a Schedule C which I will
do for 2006, because I have less of a chance of being audited. My accountant is
also planning to use the Gross W2 winnings instead of session winnings (however
you choose to define a session) on Schedule C. This greatly upset me because I
have contempoaneous records of all my play.
So I arrive at the Wynn, go to the high roller slot room and ask them to start
an accrual as I usually do but use the Corporate name and EIN number instead of
my name and my Social Security numberr as I have done in thew past. The casino
personnel know me and I can draw on a six figure marker if I need to. After a
series of phone calls between the casino personnel and even my accountant in my
home state, Wynn concludes that their policies and procedures do not allow me to
play this way. Not only that, but they have never been asked this question
before.. So for that trip I was forced to play $5. JorB since few hands result
in a W2G. This may be safe from an accounting view but is a boring way to play
for six days. Wynn says they will look into my request and I believe they will,
but everything in a large company takes time. I am not a compulsive gambler and
have many other endeavors that keep me busy, so I do not need to gamble. I am in
a quandry however since my accountant is telling me to do something the Casino
will not let me do.

When I get home I leave a post on vpFREE asking if there are any high rollers
out there who play as an S Corporation and whose residence is from a state which
does not allow losses to be deducted up to the extenty of winnings. No one
replies in the affirmative. Most seem to use Schedule C. One person does however
link me up the summary of the March 1 Ferguson court case (A losing advantage VP
player filing as an S corporation). As I read the linked site I come across the
name Of Russell Fox EA as a suggested expert on this subject. From googling Mr.
Fox's name I came across this website. I asked my accountant to call Mr. Fox and
see how he would handle my 2006 and 2007 and beyond taxes. I assume the readers
of this website are somewhat different than vpFREE of Las Vegas Advisor. Right
now I am stuck. Anyone out there have any advice. Denny

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Denny:

There isn't much advice we can give you because you already found the #1
resource for gamblers - Russel Fox. Whatever he advises you to do will be
correct. There are a few books you should be reading as well, "How to Turn Your
Poker Playing Into A Business" by Ann-Margaret Johnston, CPA; and How to Keep
More of What You Win - The Gamblers Guide to Taxes by Walter L. Lewis, CPA. Both
lewis and Johnston are noted writers with numerous articles posted around the
web, and Russel Fox has contributed to the Two + Two Magazine. If I were you I'd
get with Mr Fox immediately, he is your #1 resource.

As a side note you must have a tremendous bankroll to be playing $1 100 play
machines at 5 credits/hand. Congratulations, you are truly in the upper echelons
of video poker players.

As a moderator of the B&M forum normally I'd move this thread to the Legislation
forum because thats where we discuss taxation issues on 2+2, but this is such a
unique thread that I think its best that we let it live in B&M - there are lots
of forum regulars that will be interested in this topic I hope!

PS: I know the answer your looking for, however since I am not a practicing
accountant that specializes in gambling tax code like Mr Fox is its best to
defer to him.

TT
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Several years ago, +EV video poker machines were easy to find. +EV video poker
requires perfect play, and some of the plays are not intuitive. The casinos have
tightened up, but they can still sometimes be found.

Another play is video poker that has a progressive jackpot. When the jackpot
gets high enough, then play is +EV. Sometimes a team will attack, and take over
all the machines until the jackpot is hit. Some teams have people scouting all
the casinos 24/7, waiting for the jackpots to reach certain levels, when they
will contact the rest of the team.

Also some casino have the comp and cash back system tied to slots. So you can
play very low -EV video poker, and come out ahead when you combine it with
generous slot player level cash back and comps.

Detroit casino barred a bunch of video poker players. They were playing
slightly -EV video poker, but were running 1000s and 1000s of dollars thru the
machines to lose a few bucks. This level of play was getting them free
vacactions to the Carribean, gifts, cash, ect. thru the slot club. The casino
realized they were losing money on these VP players and barred them.

Las Vegas casinos will back off VP players if they suspect team play and
monopolizing machines. The have a pretty good handle on paybacks now, so
individual play is tolerated. Some tricks they use is the +EV machines are low
denomination, or require actually putting in coins to slow down play, ect. so
the hourly wage of playing is like $4 to $5 an hour if you want to grind it.
Another trick is to structure the payouts so the machine is very high variance.
So to get in to the long run, you need a bankroll in the $100,000 range to keep
risk of going broke low.

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According to my copy of Mensa Guide to Casino Gambling, the following bets are
the only ones with positive expectation in a casino:

Blackjack w/ Card counting... Expectation +1.00%
Video poker (Dueces Wild: full pay)... +0.76%
Video poker (10/7 Double bonus)... +0.17%

The book lists a couple other variations of VP at -0.10% to -5.00%.
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This is true if you consider only the games by themselves but when you add in
the cashback and comp benefits of a good slot club other games like 9/6 Jacks or
Better can become +EV. The edges may not be very large but when played on high
dollar demonination machines running tens of thousands of dollars through them
an hour the edge can add up quickly. The machines that are +EV by themselves
like full pay Deauces Wild are very rarely found above the $.25 level. Thus pros
can't make a decent living playing them. There are other games though which they
can when you add in the additional benefits but even these machines are not as
plentiful as they used to be.
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Indy Guy et al:

I thank all for the comments, but I think we're getting a bit off the track. I
am aware of what advantage players do and I am also aware of all the
mathematically positive games in the long run. I happen to believe that given
adequate bankroll one can beat 99% + games in the intermediate term by playing
the random cycles through an approach similar to those used by speculative
financial investors. I recognize there is no mathematical proof of this. I also
believe I am desirable customer for Wynn and they like me. Even if I win a few
bucks, I am very good publicity for the Casino because they treat me well and I
pass this message on to my friends and the blogs in which I participate.
The main question is that I reside in a state that does not let you deduct
gambling losses even thiough I only play in Vegas. I won money last year and
believe I can do it again. I have contemporaneous records of my play. What is
the best way to file my taxes. Assist Wynn in changing policy to allow playing
as an S Corporation? In other words write a white paper why it is sound legally
and accounting wise to allow for Subchapter S play in the Casino or forget about
this approach and just file schedule C. If I must file using schedule C should I
use the session method or the gross W2G method. How does one get a private
letter or other document from the IRS saying whatever method it is will be legal
to use etc. I am not trying to avoid justified Federal Taxes.
I hope my accountant is able to talk to Russell Fox in the near term to give me
guidance as right now I am in Limbo where the accountant wants me do something
that is not acceptable to Casinos. Denny

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It's too bad they know you so well, otherwise you could name your corp to sound
like a person, like Morgan Stanley. As long as you don't have to show a DL,
checks and 1099's would be made out to the corp name.

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The IRS doesn't believe in professional -EV gamblers. If you are playing -EV
video poker, you cannot be a professional gambler and last I looked the best VP
at Wynn is full pay JoB which has a 99.5% return. To be a professional, you are
expected to make money. Playing cycles and hunches and phases of the moon
doesn't alter the underlying statistics...you are just a plain ol' high-stakes
recreational gambler, and that's that. So whatever shenanigans you try to play,
when it comes down to it if the IRS gets annoyed and figures out what you're up
to they will likely put an end to whatever you're doing to try to ease the tax
burden.

Here's a court case very much like yours...a guy tried to claim he was a
professional VP player and the court stomped him:
http://www.ustaxcourt.gov/InOpHistoric/Ferg.SUM.WPD.pdf

Now, that said, I so seriously disagree with the way gambling is taxed the
prosecution would never allow me to be on any jury in such a matter. I'm in
favor of letting people handle gambling wins and losses in a rational manner.
And if you show me a tax return where you tried to pay a reasonable income tax
on gambling winnings for the year, I'm gonna be happy with you. So I wish you
luck coming up with a scheme that avoids detection. But don't be surprised if
they come knocking on your door with a hangman's noose in 5 years.
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I hope this doesn't sound personal, but there are a lot of problems with your
approach.

Letting any casino (and particularly Wynn) know that you are not playing
strictly recreationally is suicide and extremely naive. Indeed, if you are
playing a winning game (or even just their full-pay vp machines), Wynn will soon
make it impossible for you to play vp there with any hope of positive
expectation--if they allow you to continue to play at all, or even return to the
premises.

Given some of the information in your post, it will be very difficult for you to
meet the IRS requirements to qualify even to file Schedule C--particularly
making a profit 3 out of 5 years. If the bulk of your vp play is done in 6 LV
trips per year, I'd venture you have almost no chance of meeting this
requirement.

The fact that you give any credence at all to the nonsense that Rob Singer
espouses leads me to the conclusion that you are not playing vp professionally
in any sense of the word. I would conclude that you are simply a gambler who is
looking to be treated fairly by the US' tax code and the tax laws of your state.
The tax laws are very unfair in regard to gambling, but that is the way they are
written and what gamblers must deal with. The fact that you play at high limits
makes this unfairness particularly painful, but the laws still apply.
Professional players and high-rolling gamblers have searched for ways to
navigate around this for years. If there were simple (or even complex) and
established methods to do so, there would be many books and resources on the
subject.

Good luck.
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From reading our three posts it seems as if you want Wynn to accept your S Corp
for a line of credit, not for the purposes of a payout. I believe they will
accept a payout in the name of a S Corp, it happens in tournaments so its within
the range of plausible. However they are not obliged to offer a credit line to
the S Corp.

TT
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Dancer actually makes a living having casinos sponsor his free lessons every
week. Until recently he did this weekly at the Silverton, the casinos generally
encourage the action he brings for a finite period of time.

TT
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I think your the one who is misguided here, I have had this discussion already
with Wynn staff, I live very close to the Wynn and when I have free time I am
there on a daily basis. The Wynn wouldn't have so many 9/6 pay table JoB
machines multi-hand machines if they weren't trying to attract these players.
Wynn will 86 a player if he exceeds a win greater than his expected loss ratio,
AND he is an advantage player. Until the time that occurs, Wynn will just
monitor and allow the player to continue - and in fact encourage his or her
action. Now I'm not talking about .25/credit players, we are talking about
highrollers - like Denny because Wynn's expectation is far greater than their
short term loss expectation. An 86ing will only occur when the player exceeds
the accepted standard deviation curve.

Also Denny's tax status has been disputed by many here, if you noticed its a
topic I intentionally avoided other than to say speak to Russel Fox. Thats his
specialty, none of us are legally qualified to provide advice and therefore
should refrain.

TT

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The Wynn wouldn't have so many 9/6 pay table JoB machines multi-hand machines if
they weren't trying to attract these players. Wynn will 86 a player if he
exceeds a win greater than his expected loss ratio, AND he is an advantage
player. Until the time that occurs, Wynn will just monitor and allow the player
to continue - and in fact encourage his or her action. Now I'm not talking about
..25/credit players, we are talking about highrollers - like Denny because Wynn's
expectation is far greater than their short term loss expectation. An 86ing will
only occur when the player exceeds the accepted standard deviation curve.
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I think we're all still talking about two different situations here. the maximum
payout on a VP machine at the Wynn is 9/6 JoB which nets 99.54% no matter what
denominations or multiple-hand per spin scenario you wager at. combined with
their reported 0.22% cash back rate, you're maxed out at 99.76% in the long run
which is why Denny and any gambler at ANY level of betting is welcome by
management. OP is more highly coveted for the remarkably simple reason that
because he puts in more coin-in, the more theoretical profit the casino
generates in less time.

this is all somehow tied in to a Bob Dancer barring which has little or nothing
to do with Denny's situtation. Dancer has implied in the past that he will
almost never play in any theoretically -EV situation. therefore one would have
to theorize that Wynn was running a cashback multipler promotion of at LEAST 3x
cashback (since 2x would still be a hair below at 99.98%), and/or have a side
incentive such as gift cards (which he could use for personal expenses or sell
on the open market), or a VIP prize drawing for something like a car, where
amount of coin-in increases entries and proportional 'pot-equity' in winning. if
the Wynn kicked him out because he ran above theoretical during a short span of
an already +EV situation, that's management's prerogative because they chose to
gamble their large bankroll against his, no different than flying in whales from
asia to play baccarat at $100,000 a hand. loss rebates are common for big
baccarat players (there's even an entire chapter in the UNLV textbook "Casino
Operations Management" covering the topic), but I can't imagine any pit boss
ever ejecting anyone for a big win in that game. no matter what the variance,
the house is guaranteed to win baccarat in the long run, so any and all action
is forever welcome.

the dancer case could simply have been the casino gambling against itself,
losing, and reacting in a sour grapes fashion. any place in LV that still offers
100%+ VP or allows countable BJ games does this on a daily basis. despite
extending a free 0.5-1.0% in the players favor on certain conditions, casinos
generally make out ahead in the long run because players still use incorrect
playing strategy decisions, or they are underbankrolled for swings of bad luck
before they can get back to even or slightly ahead. bob dancer came into one of
these situations (which i'm sure he's done MANY times in his career), and the
casino hopes he'll drop 4-5 digits of his BR and not recover before the
promotional period ends. in this case, Wynn lost the coin flip and made the
business decision not to let Dancer continue to accrue cashback, and/or they
wanted to free up the machines for use by less-skilled high rollers instead.
another scenario is that Wynn did not know Dancer was playing (he could have
been using a friend's comp card to earn points, or he won very early in the
session) until he hit a jackpot and signed the W2G under his own name.

I hope this clarifies any Denny vs. Dancer comparisons related simply to the
stakes that they play. a $5 blackjack counter at the El Cortez is more likely to
be kicked out than a $1000 high roller playing 6:5 single deck at Caesars
Palace. the mathematical EV of the game structure can always be analyzed
independently of the wagering stakes, with a few exceptions where higher bets
yield a proportional sliding scale of comps and cashback. in this Wynn scenario
however, this does not apply.
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I'd have to talk to the op or his accountant to be able to answer his questions.
The recent Ferguson decision does not establish a precedent (it was decided in
the "small case" division of the Tax Court).

I have significant reservations about the use of corporations for professional
gamblers (for their earnings; a corporation may be right for ancillary income,
or for a player with significant ancillary income). In general, a corporate
structure has difficulties for a professional gambler.

I will point out that it's possible to have a +EV playing -EV games if the games
are just slightly negative (say 99.2% EV) and your value of comps/cashback is
1%. But if you're playing significantly -EV games, it's practically impossible
to be a professional gambler as it's practically impossible over the long-term
to beat such games (Rob Singer excepted).

-- Russ Fox
co-author, "Why You Lose at Poker"
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