IRS deals professional poker player a bad hand

Poker has been good to Michael “The Grinder” Mizrachi. The nickname came from his never-give-up mentality. He’s only 29 years old, but in the six years since he joined the professional poker circuit in 2004, he has won more than $6.7 million.

In 2005 he had a record-breaking streak in the World Poker Series that included winning $1.85 million from a single hand. In poker, he’s still red hot. But his financial fortunes have hit the skids in recent months. Earlier this year, both his home and a rental property were lost to foreclosure. Then the Internal Revenue Service hit him with a tax lien for nearly $340,000.
 
What happened?
 
The answer is twofold. Mizrachi told reporters that his accountants messed up. “They were doing a bad job,” he said, adding that they have been replaced. “I’m working on settling the liens.”
 
Unlike a lot of celebrities who try to deflect most of the blame, Mizrachi recognizes that he played a part in his financial dilemma. “Obviously, I’m a better poker player than a businessman, but I’m getting better," he said. “I’ve smartened up. We’ll be OK.”
  
Originally a medical student, in 2002 Mizrachi became a poker dealer at the Seminole Casino Hollywood in Hollywood, Florida. With his winnings, he and his poker-dealer wife purchased a home in Miramar, Florida, in 2005. The same year, he and his brother, Robert Mizrachi – also a pro poker player – bought a condo in Hollywood as a rental property.
 
When the economy began to slow down, the rental property became a problem. Mizrachi told reporters, “People weren’t paying their rent and we were advised that the best thing to do was foreclosure.” Earlier this year, both houses were lost to foreclosure, which Mizrachi estimates cost him approximately $600,000.
 
Financial worry can be deadly to a professional poker player whose ability to win depends on concentration. Just getting into a high stakes game can easily cost a player $10,000.
 
Marc Levy, who is also a professional poker player, told reporters, “If you’re in a $10,000 event every other week, that’s $240,000 just for buy-in, not to mention all your expenses. There are plenty of guys I know who do well playing poker but still go through their money.”
 
Even so, Levy said, the great thing about pro poker is, “all it takes is one win and you’re back on top again.”
 
Players sometimes get around the enormous fees by offering up a percentage of the win. So if the fee is $10,000, a player might find a backer who kicks in $2,000 for a 20 percent share of the prize. For Mizrachi, although he has won $6.7 million, he told reporters at Bankrollmob.com that he’d parceled out $3.7 million of that.
 
Mizrachi rebounds
 
Recently, Mizrachi paid $50,000 to play in the 2010 World Series of Poker (WSOP). Was it worth it? On June 7th he finished sixth in the 7-Card Stud Championship, winning $68,949. Not bad, but it pales in comparison to his performance earlier in the same tournament. Beating out other players including his own brother, he won the Poker Player’s Championship, landing a much more respectable prize of $1.56 million.
 
Chances are Mizrachi had some help paying the entry fee, which means he’ll share the winnings. And he says the IRS will get a good piece for back taxes and current taxes. How much will he have left after debts are satisfied?
 
“We will have to see how much of the winnings will go to Mike after expenses are paid," said his attorney, Steven Chung. "So we will have to wait until the dust settles before we decide what to do next."

As exciting as a $1.56 million prize is, it isn’t Mizrachi’s biggest. In 2005 he made his debut on the pro poker scene by winning $1.8 million on the World Poker Tour. In 2006, he was Card Player magazine’s player of the year.

 
As part of his win in the World Series of Poker this year, he also won the coveted WSOP bracelet. Sunsentinel.com said that, before this tournament, Mizrachi was considered the best player never to have won the WSOP bracelet. Now, says Mizrachi, his name can finally be crossed off that list.
 
The father of three learned to play poker from his brother and fellow player, Robert. Robert Mizrachi won a WSOP bracelet in a previous tournament. In the 2010 World Series event, Robert’s luck ran out when he ran short of chips on the final table. When asked how he felt about Michael’s win, he told reporters: “Am I still happy I taught him how to play? Yeah. This was as good as winning it myself.”
 
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