Two co-chairs of the Congressional Gaming Caucus, Dina Titus and Guy Reschenthaler introduced the Shifting Limits on Threshold Act (SLOT Act) in an attempt to adjust the outdated Internal Revenue Service (IRS) reporting limit for single-spin jackpots to today’s inflation.
The SLOT Act Could Trigger a 300% Threshold Growth
Nevada’s Dina Titus representing the Democrats and Pennsylvania’s Guy Reschenthaler representing the Republicans are the lawmakers who worked on the SLOT Act. If passed and signed into law by US President Joe Biden, the Act would see the IRS reporting threshold for single-spin slot wins grow by 300%, from $1,200 to $5,000. While the increase may appear substantial, it would actually bring a much-needed and long-due adjustment of the threshold in regards to the current inflation rate, according to the two US representatives. The threshold was last altered in 1977.
The 300% growth proposed by the SLOTS Act would also ease the burden on gaming operators that are required to immediately shut down a slot machine once a jackpot is hit, as well as fill in a large number of papers for patrons, including the W-2G form. This is the IRS tax document that taxpayers must use for reporting their gambling winnings as incomes on a yearly basis. Given the inflation, the number of jackpots hitting the current $1,200 threshold has grown significantly in recent years, as Titus stated. Since the gaming industry is essential for Southern Nevada’s economy as well as a number of other communities across the country where slot machines are operated legally, the new changes would trigger beneficial effects for operators.
Reschenthaler also represents a state that hosts one of the largest markets for casino gamblers in the country. He supported Titus’ statement and added that the $1,200 jackpot threshold for IRS reporting is expensive for operators. The fact that the $1,200 limit failed to keep up with inflation triggered significant growth in the number of jackpots that need to be reported. In return, this created additional compliance burdens for operators as well as tax burdens for slot winners. Reschenthaler believes the new $5,000 threshold would help eradicate the “onerous red tape”, allowing the industry to keep supporting casino jobs with good salaries while fostering growth for the economy in Pennsylvania and other US states.
The SLOT Act Has the Support of the American Gaming Industry
As expected, the American Gaming Industry offered its support for the Act, stating that this increase in the threshold would ease a number of “unnecessary” burdens for operators while properly upgrading the outdated IRS regulations on jackpots. Last December, the American Gaming Association asked the federal government to prevent illegal slot machines from being manufactured. According to the Consumer Price Index from the Labor Department Consumer, the equivalent of $1,200 in 1977 would now stand for $5,567.
In 2020, the US Congress asked the Treasury Department to find out the exact impact of a potential slot jackpot tax increase on federal government taxes. The Treasury’s report is now one year overdue. All in all, provided Biden signs the SLOT Act into law, casinos will have to fill in a smaller number of W-2G forms. In return, this may cause fewer winnings being officially reported. Players are legally asked to report and file all their wins under the “other income” tag on 1040 forms. Lots of recreational players fail to fill in this form and report their winnings, which makes the W-2G form a good solution used by the federal government to ensure it would receive its share of large slot wins
The odds of winning a slot machine jackpot range from 1-in-5,000 to 1-in-34,000,000 when the player uses the maximum coin. Last September, On Sunday, a woman from New Jersey hit the progressive jackpot on the Wheel of Fortune slot at Resorts Casino Hotel and won over $1.6 million.