What to Do with Your Big Tournament Win

01/13/2013

After months or years of grinding a modest win rate you finally hit that big score. You outlasted a field of hundreds or even thousands of players and took down a win over 100 times your buyin. It is the most money that you have ever won in your life. It may even be life changing money. What is your next step?

How Much Taxes Are Owed?

The first consideration to make is whether you owe any taxes on your tournament win. Many professional poker players throughout the world have found themselves in bad situations by not setting aside taxes on their winnings. If the player spends the money before paying taxes then it can be a nightmare that follows them for years to come.

If you live in the United States then you owe the IRS as much as 39% of your win. This does not include what a player with a big tournament score might owe their state either. There are at least 40 states that tax gambling winnings. Make sure to check your state’s tax laws to see if you will owe them money on your big tournament win too. Casinos will hold back any percentage that you ask them to from your tournament win to cover taxes. That money will immediately go to the tax authorities and get credited towards the balance that you will owe at the end of the year. This will prevent a situation where you owe taxes on your win but do not have it to pay.

European Union players should also understand their tax laws. Online poker rooms licensed in the European Union may offer players a tax haven. Players in high tax countries or ones that live in countries that tax gambling wins should understand their tax codes. This is especially true for players that do not have a job outside of poker.

Paying Debts

Once you have settled your taxes on your tournament win then you should decide what to do with your new found fortune. If you have any credit card debt then that should be the first place to spend your money. There is no reason to have that hangover where you could have paid your debts but ended up spending the money on less responsible things such as bad gambling or gentlemen clubs.

This includes paying your backers. If someone loaned you money to enter the tournament then they need to be paid before you do anything else. Anyone that reads poker forums has seen that player that nailed a big score from a tournament but did not pay their backers like they should have. Do not let your reputation get destroyed like too many others have done.

Moving Up Limits

Many poker players might decide that a big tournament score is a good time to move up in limits. This is often a good idea if it is well planned. A good tournament player is not always a good cash game player though. Extra care should be taken with the decision to play cash games with a big tournament win. Too many players that have won the Sunday millions played cash game limits that would be considered nosebleeds. Many of these decisions turned out to be poor in hindsight. There is nothing wrong with taking a shot but players should set aside no more than 20% of their big win to play with the pros at high limits. Using that money in multi table tournaments would be a wiser use of the money since a big tournament score required a different set of skills than a good cash game run does.

Evaluate Why You Won

The best thing to do is learn what got you into the position to make the big score. Was it pure luck? Was it a soft field? The invincible feeling is normal. Successful online poker players will realize that winning a lot of money in a big tournament is somewhat of a fluke. A player needs to set aside at least 50 buyins at that limit to make sure that variance will not ruin them. After paying taxes there may not be much more left than that left if the buyin that won the big score was not from a proper bankroll.

Do Not Regret Blowing Your Win

The worst feeling that there is in the poker world is making the big score and having nothing to show for it. This happens to people in all walks of life from actors to athletes. Do not let this happen to you. Do not let a big tournament score let you get off track. Set aside some money to have fun with, some to pay taxes and some to keep you on track to being a successful poker player down the road. No matter what you should avoid giving that money to a casino in their house games. That is the worst way to invest your new found fortune.