You won a million dollars playing the video game League of Legends, what will you do next?
Go to Disneyland?
No, pay state taxes.
The state taxman is getting wise to the new professional sports leagues and are taxing, or intending to tax, video gamers for money won at the tournaments.
Like the “jock tax” where each state taxes an athlete if s/he plays a game in that state, video gamers need to be aware that they will be subject to the same income taxation in New York as Derek Jeter if they, say, win money at Madison Square Garden just using their thumbs.
In addition, if you are an e-sports team owner, you probably should be withholding federal and state income tax from your player if you are paying them a salary. One international team interviewed by the Washington Post doesn’t withhold but provides players with an accountant to help them figure it out.
Governments are reactionary; it takes time to catch up, but once they do, watch out!