The slot jackpot threshold for reporting to the IRS was established back in 1977. Any win, equal or greater than $1,200 needs to be reported with IRS Form W-2G by both patrons and casinos. Despite that the gaming industry urged for changes of the threshold, so far no actions were taken by the IRS or the Treasury.
The $1,200 Slot Jackpot Threshold – Not Reviewed since 1977
Established back in 1977, the threshold for reporting a slots jackpot win to the Internal Revenue Service (IRS) hasn’t been changed since. Despite that many industry and government officials have raised the issue, so far no action is taken by neither the Treasury nor the IRS. But the casino industry continues to expand in the United States and by now, the $1,200 threshold for slot machine jackpot is already out of date.
Under the current regulations, an IRS Form W-2G must be issued whenever a player wins a jackpot of $1,200 or more on a slot machine. Currently, it is mandatory for the operator to issue the W-2G form and to report the win to the IRS. Although the amount was won by the person, this is still a taxable income, which must be present on each person’s tax Form 1040. And while raising the threshold for slot machine jackpot winnings sounds like a simple request, this matter may even get to Congress on its way to resolution.
A Long-Standing Issue
Undoubtedly the issue with the threshold for slots jackpots has been long debated. Last year in May, Representative Dina Titus of Nevada’s First Congressional District together with Representative Darin LaHood of Illinois’s Eighteenth Congressional District sent letter to the U.S. Department of the Treasury Assistant Secretary for Tax Policy David Kautter. In the letter, the two government officials urged the Treasury to raise the threshold for reporting of slot winnings.
“When a player hits the jackpot on a slot machine above the $1,200 threshold, the machine locks up and stops play,”
reads the bipartisan letter dated May 13, 2019
The letter also outlines that by raising the threshold limit, the burden of paperwork will be reduced for both businesses and players. At the same time, the tax code will be able to reflect the “current economic realities,” adds the bipartisan letter.
Senator Catherine Cortez Masto showed support for the efforts of Titus. The senator’s communications director, Ryan King said that the Senator has engaged with the IRS to “secure this necessary reform that hasn’t been pursued in decades.”
GMA and AGA Support the Increase of the Slot Jackpot Threshold
Brendan Bussmann, director of government affairs for Global Market Advisors (GMA) showed support for the slot jackpot threshold increase. According to him, the threshold is one of the things that need to be modernized in the gaming industry. Bussmann added that a possible reason for the delay in resolving the issue may be the many complications which the COVID-19 pandemic brought. Deciding on resolutions on the federal budget and discussing terms of the needed stimulus package seem like a higher priority for the moment than a change in the threshold, concluded Bussmann.
“Raising the threshold would be a win for the industry, the patron and the IRS,”
Brendan Bussmann, GMA
The American Gaming Association (AGA) also urged government officials to update the outdated jackpot reporting threshold. In a statement released in May this year, AGA’s director Bill Miller urged for action by the Department of Treasury. He wrote: “Last year, the AGA again encouraged the Department of Treasury to update the slot jackpot reporting threshold to a realistic level, in line with inflation, such as $5,000.” He stressed that an increased threshold would let the IRS free up resources as it wouldn’t have to pursue winnings close to the $1,200 threshold. Furthermore, the communication between patrons and casino employees will be reduced, which may prove to be quite beneficial, considering the COVID-19 environment.