Spanish Chess Grandmaster Hounded by Tax Officials Over Poker Play
Posted on: April 7, 2018, 11:00h.
Last updated on: April 7, 2018, 08:31h.
Francisco Vallejo Pons is Spain’s top chess player, a grandmaster who is ranked 36th in the world, according to the April FIDE ratings list.
But he is finding it difficult to compete in top events, as he is being hounded by Spanish tax officials who say he owes more than half a million euros for his online poker play – even though Vallejo says he actually lost money while playing the game.
The story emerged last month, when Vallejo let the European Individual Chess Championship in Georgia after the fifth round. That led to a long Facebook post from the grandmaster, who revealed that he had been struggling with a number of personal issues.
Chief among these was an outstanding dispute with Spanish authorities over online poker play that occurred back in 2011.
“I’m not a gambler by any means,” Vallejo wrote, according to a translation by Chess.com. “I lost everything, a few thousand, and I stopped playing.”
Tax Dispute Surfaces Years Later
That seemed like the end of Vallejo’s very amateur poker career. But five years later, it came back to haunt him in an unexpected way.
“In 2016 I receive a letter from [Spanish tax officials] requesting more than 6 figures,” he wrote. “More than half a million euros because I played poker and lost.”
At issue is an old Spanish tax law that was in effect through 2012. Under that law, online gambling earnings could be subjected to taxes at a rate of 47 percent, and losses were not deductible. For a poker player, that causes serious problems, given the number of individual sessions that are considered wins or losses. Because Vallejo took a while to lose his bankroll, he booked many winning sessions along the way, sticking him with a massive tax bill.
Spain’s tax laws were updated in 2012 to prevent this situation from occurring again. However, because Vallejo’s play came before then, it is still subject to the tax regulations that were on the books at the time. He says that tax officials know that he lost money over all playing poker, but that they don’t care, and have already seized most of his savings.
Stress Threatens Chess Career
According to Vallejo, the pressure of the tax liability began to impact his chess career. He cancelled tournaments, and stopped participating on the national team in international events. That culminated in his decision to leave the tournament last month, the first time he had left a tournament early in his career.
“It was a mistake to come to the European Championship,” Vallejo said. “I was not prepared for that, although I would have loved it, the reality is stubborn.”
One of the key points he has wanted to make is that he is not alone in this situation, even if his story has become the most high-profile case.
“There are hundreds of equal cases,” Vallejo wrote in another Facebook post on the subject. “Many people who in their day played poker or sports betting for a hobby, and lost small numbers, are now involved in terrible judicial processes, with their accounts seized and their lives destroyed.”