Dear Mark: If the automatic W2-G reporting on a slot machine is for a jackpot of $1,200, does that hold true for higher-denomination machines as well? Bill W.
Yes, Bill, and it may get worse. The IRS is now floating a plan for a bigger share of your jackpots: the meager ones.
At present, the fortuitous player winning a $1,200 jackpot will find that the machine automatically shuts down until a casino employee arrives with your W2-G.
Earlier this year, as part of an expansive rewrite of gambling tax law, the IRS put forward the idea of lowering the mandatory reporting minimum for slot machines to $600. Uncle Sam figures that since, by law, gamblers must pay taxes on every dollar they win at casinos, bingo parlors, racetracks, even an informal football bet with Uncle Louie, the IRS might as well capture more with a lower jackpot threshold.
Those $600 jackpots will not only trigger a tax form, but if you play another hour or two, your taxable winnings will probably be long gone by the losses you incur, and your tax liability will still be outstanding. A reportable jackpot may not even offset your losses from when you sat front-and-center on that same machine one hour prior.
Certainly, Bill, you can keep track with meticulous records of your losses to offset any winnings, but few, if any, casual gamblers do.
Personally, I do not support, or expect, the $600 reporting threshold to make it into any final ruling. If anything, I believe the W2-G limit should be raised to at least $2,500. I will keep you abreast, Bill, of any change to the gambling tax law.
Dear Mark: Longtime reader, first time writing in. I am going to Las Vegas in October – my first trip – for the World of Concrete convention at the Las Vegas Convention Center. With tens of thousands of us non-gamblers showing up, I am curious to know if the casino can flip a switch to make the machines hold more, or, if that is not possible, swap out the machines to ones that are tighter. Also, what are some of the expected returns that I will find on slot machines on the Strip where I am staying? Marv B.
No, Marv, there is no magic switch that’s flipped from some secret undisclosed location, nor chip or machine swapping happening to hornswoggle unsuspecting conventioneers out of more dough.
The only time that a machine is swapped out is when management believes it is underperforming or decides to convert the machine to a newer or more popular model. Believe me, Marv, it is no bang-bang deal when they do.
There is a litany of lengthy sequential steps the casino has to take in most gaming jurisdictions to change the percentage return more in the casino’s favor. With thousands of machines on the floor, it is not cost-effective for casinos to vary the payouts on weekends, holidays, and yes, Marv’s concrete convention. Unquestioning tourists are safe, for now.
As for the hold percentage averages for the Las Vegas Strip, they are approximately 11 percent for nickels, 6-7 percent for quarters, 4 percent for dollars and 3.5 percent for five dollars and above.
Gambling Wisdom of the Week: “How the IRS views gambling is a murky, swampy, stinky cesspool, so wide that it’s extremely difficult to maneuver around.” – Jean Scott