Congress may change an outdated rule that would set a higher threshold for slots winnings that must be reported to the IRS (which Caesars, MGM and others should love).
Every casino player lucky enough to hit a slot machine jackpot knows the downside of winning $1,200 or more. When that happens, after the initial excitement has worn off, you quickly realize that your machine is frozen and you won’t pay. Instead, a warning appears to wait for an assistant.
Waiting for an attendant can be a problem, even at major casinos owned by Caesars Entertainment. (CZR) – Get a free report and MGM Resorts International (MGM) – Get a free report there seems to be no connection between the machine telling you it needs an attendant and one actually coming. Some machines have buttons you can press that turn on a light that’s supposed to signal an attendant to come check it out, but that’s not a perfect system.
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The machine locks up and does not print your winnings because any winnings of $1,200 or more must be recorded by the casino and reported to the IRS. So, in a perfect world, you hit the jackpot and someone rushes over to collect your ID to fill out the IRS W2-G form to report your winnings to the government.
Once you’ve been given that form, your machine is unlocked and you’re paid right there (which is why these are generally known as “manual payments” or you can print a receipt. It’s a clunky system that’s been around since 1977, a time when $1200 was so much more money than it is now, which hasn’t changed once since it was introduced.
Last year, Nevada Democrat Dina Titus introduced the SLOT Act in the US House of Representatives, and despite its clever name and bipartisan support, the bill failed to advance. .
Image source: Bernard Annebicque/Sygma/Sygma via Getty Images.
A new attempt to increase the tax threshold on slot machine winnings
Although Titus failed during the last session of Congress, he plans to try again, according to a report from the Las Vegas Review Magazine.
“There was a time when we were trying to get the Treasury Department to do this through regulation, but it never budged, so we’re just going to push legislation instead,” Titus told the newspaper.
His new proposal is quite similar to the SLOT Act. She wants the IRS reporting threshold raised to $5,000 and indexed for inflation. When she first proposed the SLOT Act, which was not voted on in the last session of Congress, she issued a statement explaining her actions.
“Due to inflation, the number of jackpots reaching that threshold, causing the machine to shut down and requiring excessive paperwork requirements for the customer, has increased dramatically,” Titus said in a press release. “This creates an unnecessary burden on the gaming industry, an economic engine for southern Nevada and other communities across the country where slot machines exist. While I believe appropriate taxes should be levied on profits, raising the threshold would reduce red tape and ensure this is accomplished more efficiently.”
Good for players and casinos
The last thing Caesars, MGM or any other casino wants is for a player to hit a jackpot and then have to slowly sit back and get angry. Ideally, at least for the casino, when someone wins a large amount, he can immediately play again (and perhaps lose some of his winnings).
Titus’ law, which she believes will have bipartisan support from states with legalized slots, simply removes a pain point. Casinos won’t have to put their work into a tedious process and players won’t have to figure out how to get an attendant to pay attention to them when they can’t get away from their machine.
And while this seems like a logical change for Congress to make, gaming industry expert Brendan Bussmann told the newspaper he doesn’t expect it to pass.
“The challenge that we are going to face is that you have a dysfunctional legislative body that will not see this as a bipartisan problem. It’s time to update the system and raise the threshold for taxable earnings. This should be a no-brainer, but in an age where we live with continual resolutions, this gets lost in the shuffle,” he said.
