A new bill would set a higher threshold for what slot winnings need to be reported to the IRS (which Caesars, MGM, and others should love). Should you bet on it passing?
Imagine paying the same rate for anything that you did back in 1977. In that year, the average host cost $54,200, a gallon of gas was $0.63, and $3 bought a dozen eggs along with a gallon of milk with change to spare.
1977 was also the year the Internal Revenue Service (IRS) set its standard for the level of slot machine jackpot that must be reported to the federal agency for tax purposes. That number was set at $1,200 and it hasn’t changed since then.
Now, back in 1977, in the age of rotary phones and over-the-air television, $1,200 could buy you a pretty decent car. Now, it’s about 10-12 tanks of gas for the average full-size pickup truck.
Gamblers, as you might imagine, don’t like having to declare their winnings to the IRS. It takes some of the magic out of the thrill of winning. Having to create the paperwork to report those winnings is also a hassle for Caesars Entertainment (CZR) – Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) – Get MGM Resorts International Report, Wynn Resorts (WYNN) – Get Wynn Resorts Limited Report, and every other casino operator not just in Las Vegas but around the country (and even on cruise ships sailing from U.S. ports).
Picture this seen, a person has a few dollars bet in a slot machine and their next spin wins them $1,200 or more. There’s a shout of excitement, people in the casino get excited, then the machine locks out, and the winner has to wait for an attendant. That casino employee then takes the person’s licenses, disappears for a while, and then returns with not just your winning, but also an IRS tax form.
That’s like having a team win the Stanley Cup and then, instead of presenting the trophy to the captain and letting everyone skate around with it, everything stops so people can fill out customs forms to take the cup into Canada.
A new proposed federal bill would raise the limit and make reporting much less of a burden for casinos.
Image source: Palms Casino
What’s in the Shifting Limits on Thresholds (SLOT) Bill?
Aside from trying to way too hard to have a cool acronym, the Shifting Limits on Thresholds (SLOT) Act, which was introduced in the House of Representatives by Nevada Democrat Dina Titus, has good intentions to make things more fair for slots players.
Poker winnings, another form of gambling offered in casinos, don’t require IRS reporting until a player wins $5,000. The SLOT Act would make the threshold for slot machine jackpots the same “index it to inflation in perpetuity. (The threshold would be rounded to the nearest hundred dollars, to prevent it from being a number like $5,168.13), GovTrackInsider.com reported.
“Due to inflation, the number of jackpots hitting that threshold, triggering a shut down of the machine and necessitating excessive paperwork requirements for the patron, has increased dramatically,” Titus said in a press release. “This creates an unnecessary burden on the gaming industry, an economic driver for southern Nevada and other communities nationwide where slot machines exist. While I believe appropriate taxes should be collected on winnings, raising the threshold would reduce paperwork and ensure this is accomplished more efficiently.”
Will the SLOT Bill Pass?
While the bill has bipartisan support (and Caesars, MGM, Wynn, and other casino players certainly want it to pass) it, like many bills in Congress has gone nowhere despite this seeming like legislation that few could argue with. It was introduced in March and nothing has happened since despite the heavy support of the gaming industry.
“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 IRS,” American Gaming Association President Bill Miller said, the Las Vegas Review-Journal reported.
Efforts have been underway since 2020 to increase the threshold asked the “Treasury Department to study and recommend a regulatory adjustment of the winnings threshold in 2020.,” the paper reported.
That report has yet to be filed.