Today marked a huge milestone in the evolution of Esports! The International Olympic Committee (IOC) announced that the first Olympics Esports Week will take place June 22 – 25, 2023.
This three-day event will be capped by the first in-person live finales of the Olympic Esports Series to be held in Singapore. Who would have thought that collecting rings in “Sonic the Hedgehog” could one day lead to the Olympic Rings?
While this news is exciting, it also comes with potential tax ramifications. Did you know that winning a medal comes with a cash bonus? Based on the 2020 Olympics, the following bonuses are won for the medals; $37,500 (Gold), $22,500 (Silver), and $15,000 (Bronze). To put that into a tax perspective at the highest bracket, currently 37%, the following taxes would be owed; $13,875 (Gold), $8,325 (Silver), $5,550 (Bronze), and there could be additional state taxes depending on the state residency of the athlete. While those prizes stated above were for the 2020 Olympics, it is currently still unknown what the official prizes will be for the Olympics Esports Week, but it is something to keep in mind. Also to note, in 2016 H.R. 5946 was passed by the government to limit the tax on cash bonuses to only Olympians who have less than $1,000,000 in adjusted gross income.
This news is a big step for the Esports industry. As we mentioned in last week’s article, Esports Industry Trends, Esports has taken the world by storm as the next big competitive sporting league. This industry is still in its infancy stage and has a lot of room for exciting growth. Feel free to follow Withum for the latest accounting updates on Esports as we continue to monitor and advise the industry.
For more information on this topic, please contact a member of Withum’s Sports and Entertainment Services Team.