Why should the Jackpot Limit finally be raised? Let’s investigate why It’s Time to Raise the Jackpot Limit.
Bill is Introduced
The gambling industry, its guests, and allies in Congress are resuming an overdue goal to increase the jackpot limit that mandates a report to the IRS. The legislation was introduced last month by U.S. Reps. Dina Titus, a Nevada Democrat, and Guy Reschenthaler, a Pennsylvania Republican. If the “Slot Act” passes, the result would decrease the number of slot machine jackpots reported to the IRS.
Congress directed the U.S. Treasury Department to look into raising the limit in Dec. 2020. Still, a report has not yet been issued and is nearly a year overdue, according to the letter sent to Treasury Secretary Janet Yellin by six members of Congress.
What is the Tax Threshold?
Generally, you’ll receive an IRS Form W-2G if your gambling winnings are at least $600 and the payout is at least 300 times the amount of your wager. However, most players only have to be aware of the following thresholds –
- $1,200 for bingo, slot machine, and video poker machine winnings,
- $1,500 for keno winnings, and
- $5,000 for poker tournament winnings
All casino winnings are subject to federal taxes. However, the IRS only requires the casinos to report wins of $1,200 and over. That’s when you are issued a W-2G form. If you win $1,199.99 or less, there is no W-2G.
The Advantages to Pass the “SLOT ACT”
The bill, or the “Slot Act,” would increase the threshold for IRS reporting of slot jackpots from $1,200 to $5,000 and provide a mechanism for future increases based on inflation. According to the American Gaming Association, the limit hasn’t changed since 1977. It’s Time to Raise the Jackpot Limit.
There are many positive aspects to the legislation passing. For example, the $1,200 jackpot threshold for IRS reporting is expensive for operators. And a higher jackpot limit benefits casinos, which would need to temporarily take fewer slot machines out of service while tax forms are filled out for winning patrons. In addition, floor staff, at least two at a time, wouldn’t need to be taken off the job to notate, go to the cage, wait for the payout and eventually pay the player.
For players, it would prevent more slot jackpot winners from reporting their winnings to the government. Approximately 24% of the amount won is now deducted from your payout automatically and sent directly to the IRS. With that amount raised to $5000, there would be no automatic connection to the IRS, and you would have all your money, under $5000, in your pocket.
A Single Spin Example – Today’s Casino Limit Affects
When a casino patron wins a single spin slot machine jackpot of $1,200 or more, the machine locks up. It’s then temporarily taken out of service while the patron must complete a W-2G tax reporting form. A single spin also includes the draw on a multi-hand video poker game.
You’re playing 5-play video poker. The denomination is $.25. The first pull is four to the Royal –> 10, J, Q, K of spades. On the draw, you hit one Royal ($1000) and four straight flushes (yeah, play along). 4 X $62.50(StF) = $250.00 + $1000(RF) for $1250.00.
$1250 – yahoo!!! But wait. Since it’s over the 1200 limit, you can expect to be taxed about 30-35% on federal and state taxes. So, for a great hand of a Royal Flush and four Straight Flushes, after taxes, you receive approximately $825.00. So just because you went over the tax threshold by $51, you lose over $400 to the feds. And that reason for raising the tax is the primary concern for players.
The guy next to you hits a slot bonus for $1150. No taxes, and play goes on. Then you hit a slot bonus of $1208.00, and the following happens:
- The machine locks up.
- you wait for floor staff to notice (could be up to 5 minutes)
- the staff person takes down some of your info, as well as the machine info
- staff leaves – returns anywhere between 5 – 20 minutes, depending on how busy the casino is
- staff returns; this time, two or three of them pay you, reset the machine, and you’re back in business.
- However, your $1208.00 win is a little under $800 paid with taxes taken out.
Related Post – Little Shop of Horrors Slot by Everi
Catching Up To Inflation – It’s Time to Raise the Jackpot Limit.
“Increasing the slot tax threshold to account for inflation is a long overdue change that will alleviate unnecessary administrative burdens on casino operators, their customers and an understaffed and overwhelmed IRSBill Miller, president and CEO of the American Gambling Association
If passed and signed into law, the Slot Act would see the IRS reporting threshold for single-spin slot wins change from $1,200 to $5,000. That’s a growth of 300%.
While the increase may appear substantial, it would bring a much-needed and long-due adjustment of the threshold regarding the current inflation rate. According to the Consumer Price Index from the Labor Department Consumer, the equivalent of $1,200 in 1977 would now stand for $5,567.
U.S. Reps. Dina Titus and Guy Reschenthaler reported the effects of not keeping up with inflation:
- triggered significant growth in the number of jackpots that need to be reported, which
- created additional compliance burdens for operators and
- tax burdens for slot winners.
Summary – Time to Raise the Jackpot Limit
As for predicting its success, frankly, we’re a bit pessimistic, at least in the short run.Las Vegas Advisor
Las Vegas Advisor reports that there are four main reasons why chances of passing aren’t good. Unfortunately, NETG won’t comment on them due to their political nature. However, if you’d like to read it yourself, click HERE.
I want to stay optimistic. Let’s hope gamblers from both sides of the aisle prefer the SLOT ACT passed.