For almost 50 years now, federal law has decreed that if someone wins more than $1200 while playing slot machines or video poker in a U.S. state or in its waters, the casino is required to provide both the winner and the Internal Revenue Service with a W-2 G form. The government also says that the winner must report the $1200.01+ winnings on their personal income tax return.
When the law went into effect, gambling was legal only in one state—Nevada. A lot has changed since then, including the statewide expansion of casino gambling via commercial and tribal operators across the United States. The existing regulation creates a burden not only for the IRS but also for casino operators and their players.
“This [threshold] creates an unnecessary burden on the gaming industry, an economic driver for southern Nevada and other communities nationwide where slot machines exist,” said Rep. Dina Titus, D-Nev., who has been trying to get the government to increase the IRS threshold for almost a decade. “While I believe appropriate taxes should be collected on winnings, raising the threshold would reduce paperwork and ensure this is accomplished more efficiently.”
Not surprisingly, the American casino industry agrees.
“The antiquated slot tax threshold creates unnecessary burdens for consumers, casino operators and the IRS,” American Gaming Association CEO Bill Miller said.
The government may finally be listening.
What the future could hold
According to the Las Vegas Review-Journal and other publications, Titus and a bipartisan group of her fellow Congresspeople — Steven Horsford, D-Nev.; Mark Amodei, R-Nev.; Guy Reschenthaler, R-Pa.; and Anthony Brown, D-Md. — co-sponsored a bill in 2022 called the Shifting Limits on Thresholds (SLOT) Act, which would have raised the threshold to $5,000. It was referred to the House Committee on Ways and Means, but no further action was taken.
BUT (and this is important), the effort was boosted in November, when the IRS Advisory Council (IRSAC) recommended to IRS commissioner Danny Werfel that the threshold be increased to $5,800 ($800 more than that SLOTS bill recommended, and almost FIVE TIMES the current threshold. IRSAC says the extra $800 would account for inflation).
So, the IRS is listening…and they’re looking at the facts. There’s no word on what sort of timeline would exist for making the change. But it’s a possibility, which is….something.
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