by Tom Bastek
Last updated: 5:30 PM ET, Mon June 1, 2015
Photo courtesy of Thinkstock
The U.S. gaming industry has until tomorrow, June 2 to give its opinions to the IRS before it makes an adjustment to the minimum taxable threshold for gambling.
Right now, if a gambler wins $1,200 or more, their machine locks up and the staff comes over to make the guest fill out a W2-G form. Once the form is filled out, the attendant unlocks the machine and the guest can continue to play. If the IRS has its way, that amount will be dropped to $600, but casinos are rallying against the lower limit, citing increased time constraints and revenue loss.
"At SugarHouse [Casino], about 1,700 people each month fill out W2 forms after winning $1,200 or more. Under the proposed rule, that number would grow to 10,000 a month," said SugarHouse General Manager Wendy Hamilton.
The casino industry is worried that taking the time to fill out all of the forms will cause revenue loss. Let's take a real look on how this is going to affect the average guest to a casino.
Time
Let's remember that the majority of people who are filling these forms out are generally high rollers and people who occasionally get lucky. If we take video poker, where your odds are the best out of any machine game, even if a guest is gambling max coin on a $1 video poker machine ($5 per hand), they would have to hit a Royal flush in order to even necessitate a W2-G form.
And the odds of a royal flush turning up? One in forty-thousand.
Even if you were playing max bet on a $5 machine ($25 per hand), you would have to pull a four of kind, which comes up on the average of once in 423 hands. The casinos here are oppoosed to the lower limit mostly because of the fact that high rollers hate filling out forms and stopping playing to begin with so much so that they don't have to fill out a hundred forms. The attendants keep a log and track the amounts of the jackpots (the industry refers to anything over $1,199 as a jackpot).
Money
There is surely an increased amount of staffing that some of these resorts may have to provide depending on how many high rollers that they have popping off a jackpot every three hands, but it certainly isn't going to break the bank. The truth is that once hard coinage was eliminated in casinos, companies got to cut back their slot staffs to ten percent of what used to have and with technology, those numbers only continue to dwindle.
In terms of what it might cost you as a gambler, well that of course is based on how much you win or lose. Here is the best piece of advice that anyone can give you: Make absolutely sure that your player's card is in that machine before you even put your first dollar in. What most people don't know is that if you do win a jackpot, you can take your losses away from that W2-G. Those player's cards keep track of all your gaming and at the end of the year, you can either go online or contact the casino directly and request your win/loss statement for tax purposes.
Some of the gaming companies are complaining that slot revenues are already down and lowering the threshold is only going to hurt revenues more. What hurts revenues more is lack of payout. Vegas was built on a four percent hold and nowadays some of these resorts have the gall to hold between 14 and 24 percent. When people don't win, they stop playing.
The one really crazy thing about this change that the IRS is making is that if the slot machine is mechanical still (with actual spinning reels) the threshold would stay at the $1,200 level. Only the electronic machines would make the change.
Sounds like the IRS needs to get their ducks in a row and the Gaming Industry needs to not rely on the big players for their income. If the gaming industry has not made their case by June 2, there is a hearing in Washington D.C. on June 17 before the final decision is handled internally by the tax agency.
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