Congress Proposes Legislation to Raise Limit on Documenting Slot Jackpot Wins

Legislation is being introduced in the U.S. Congress that would raise the dollar threshold for when gambling operators are required to issue documentation on a slots jackpot. Winning bettors must pay taxes on online slots as well as jackpots at brick-and-mortar casinos. Currently, gambling operators are obligated to issue a W-2G on jackpots of $1,200, a threshold that was set in 1977. The legislation introduced on Thursday would raise the threshold to $5,000.

The bipartisan legislation was introduced by Congressional Gaming Caucus Co-Chairs Reps. Dina Titus (D-Nev.) and Guy Reschenthaler (R-Pa.). The legislation is co-sponsored by Reps. Mark Amodei (R-Nev.), Anthony Brown (D-Md.) and Steven Horsford (D-Nev.).

Current Limit Unchanged Since 1977

When the original threshold was set, a $1,200 jackpot was a sizable win for many gamblers. That’s still a tidy sum but in the 45 years since then, with inflation creating upward pressure, jackpots of that size have become far more common. That has created ever increasing occasions when casinos must issue a W-2G to the customer and notify the Internal Revenue Service. When adjusted for inflation, a $1,200 jackpot in 1977 would be equivalent to more than $5,000 today.

The proposed new legislation would amend the tax code and apply to payments made after Dec. 31, 2022.

The American Gaming Association, the trade group that represents the gaming industry, has been advocating for what it characterizes as a common-sense inflation-adjusted change in the tax law.

”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,” AGA President and CEO Bill Miller said in a release on Thursday.

The proposed legislation would also include a mechanism to adjust the threshold to account for inflation in the future.

Mechanism For Reporting Winnings

According to the AGA, under current federal regulation, when a casino patron wins a slot machine jackpot of $1,200 or more, the machine is temporarily taken out of service while the winning customer is required to complete a W-2G tax reporting form. Those who win at real money online gaming devices do not encounter such stoppages, though their winnings are also taxed.

Previously, there were efforts to change the threshold through regulation and Congress had directed the Treasury Department to investigate the possibility of updating the slot jackpot threshold through that means. However, Treasury has not submitted that report to Congress.

The new legislation might be a quicker way to make that change happen.

”Today’s legislation provides Congress a direct path to modernize the slot reporting threshold,” Miller said. “We look forward to continuing to work with these bipartisan leaders on Capitol Hill to address outdated regulations that impact our industry.”