The instructions to Form 5754 provide that the form is to be prepared “only when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings, such as by sharing the proceeds of the same winning ticket.”
While we understand that WSOP participants may enter into a variety of arrangements with third parties concerning (1) the financing of the initial buy-in and (2) the sharing of proceeds from the tournament, it is our view that the “winner” is unambiguously the individual that participated in the tournament. Poker is both a game of skill and chance. In the situation posed by the form instructions, i.e. – a group of people sharing a winning ticket, the ultimate winnings were not dependent on the skill and talent of the person receiving the winnings. By contrast, an individual that provides the front money for a poker player is less the winner of a poker tournament (requiring a W2-G) than the beneficiary of a speculative financing arrangement or partnership agreement, which necessitates different filing requirements with the IRS.
Moreover, our terms and conditions provide that (1) no teams, substitutes, transfers, or assisted play will be permitted and (2) prizes are nontransferable. Accordingly, our terms and conditions specifically prohibit the hypothetical of more than one individual being designated as the “winner” of a single poker payout.
U.S. tax law provides a variety of avenues by which individuals may report their taxable income to the IRS in a manner that conforms with the underlying economics of their agreement. Players are advised to consult their tax advisors to determine the best course of action that suits their individual circumstances.