Paul Szydelko
In the warm, satisfying feeling of a slot machine win of more than $1,200, it's the splash of cold water to the face. In addition to handing out all that cash, the casino must provide the winner and the Internal Revenue Service with a W-2G form, and the winner must report the winnings on their personal income-tax return.
But that $1,200 tax-reporting threshold, in place since 1977 when Nevada was the only state with legalized casino gambling, may soon be raised to as much as $5,800. Bipartisan support from Congress and an IRS Advisory Council opinion are providing some momentum for the increase. But the timing of any IRS regulation change remains uncertain.
"This [threshold] creates an unnecessary burden on the gaming industry, an economic driver for southern Nevada and other communities nationwide where slot machines exist," said Rep. Dina Titus, D-Nev., who has been arguing to increase the IRS threshold for years. "While I believe appropriate taxes should be collected on winnings, raising the threshold would reduce paperwork and ensure this is accomplished more efficiently.
Titus and fellow members of Congress -- Steven Horsford, D-Nev.; Mark Amodei, R-Nev.; Guy Reschenthaler, R-Pa.; and Anthony Brown, D-Md. -- co-sponsored a bill in 2022, aptly named the Shifting Limits on Thresholds (SLOT) Act, which would raise the threshold to $5,000. It was referred to the House Committee on Ways and Means, but no further action was taken.
The effort, however, was boosted in November when the IRS Advisory Council recommended to IRS commissioner Danny Werfel that the threshold be increased to $5,800.
Support within the gaming industry
The American Gaming Association has long supported Titus' efforts to change the reporting threshold, and AGA chief Bill Miller said the IRS commissioner should accept the advisory council's recommendation.
"The antiquated slot tax threshold creates unnecessary burdens for consumers, casino operators and the IRS," Miller said.
Additional members of Congress wrote to Werfel in February to urge him to adopt the advisory council's opinion and change the threshold without any new legislation.
They noted that 21.2 million W-2G forms were filed in 2022. "Due to inflation, this leads to increasing compliance burdens on taxpayers and significant operational costs for casinos that are providing family-sustaining jobs in our states."
The letter went on to say that the forms only capture a singular jackpot and do not report on a patron's ultimate taxable gain or loss from slot play.
Werfel and the IRS have not commented on the issue. But winners hoping to maintain their warm reverie when the slot machine lights up in Las Vegas and casinos throughout the country are watching -- and hoping -- for a change.