Taxes, particularly in the U.S., are complicated. The recent changes in the U.S. federal jackpot handpay reporting threshold were confirmed weeks before taking effect, leaving casinos with little time to execute a plan of attack. Some slots needed software updates to be able to change the threshold, and some might be too old to ever get an update. Casinos don’t own all the slots. Some casinos have thousands of machines to update.
And even with all of that, there’s other complications, like this:
Just a question you might be able to answer. I bet $5 and won $1,500 on a slot machine. Why did I get a W-2G form when according to new tax law I should not unless it’s over $2,000. When I asked they said something about 300x my bet. Do you or any of your followers know?
Kathleen L.
Sometimes the machine you’re playing may look like a slot machine, but isn’t a slot. When that’s the case, the rules on when a taxable outcome happens can differ as well.
The 300x the wager rule is a common one (and is usually also paired with a minimum win size to avoid paperwork on smaller bets). This is how table games are regulated, for instance, which is why it’s unusual to get a tax form at a table game. This is also the case for historic horse racing machines, and some video lottery terminals operated in some states by the lottery.
So based on the information they gave you, we expect that’s what is in play here. The machine you were playing wasn’t a slot machine but a game designed to offer a slot-like experience, but the outcome was governed in some other way.
At this point there’s a growing number of scenarios like this. Most common are the Class II Bingo Machines that have slot reels, but the outcome is governed by bingo. Another pretty common scenario is the previously mentioned Historic Horse Racing.
The video lottery terminals offered in New York, and another somewhat similar form offered in Washington State, operate more like a scratch ticket or pull tabs, where a stack of outcomes are determined, and when you place a wager, an outcome is randomly selected from the pool.
There is even recently launched online tech in Florida that uses historic motor racing events to generate outcomes for slot-like games. The Seminole tribe, who owns Hard Rock, which launched this option, was also a big innovator for the Class II Bingo Machine space.
None of these are slot machines, but efforts have been made over time to create an experience that is more and more slot-like, and in some cases you’d be hard pressed to tell the difference.
At our local casinos here in California, you’ll often see a mix of slots and Class II Bingo Machines in the same casino, often in adjacent rows. Many of the same themes appear in both. But the way they determine the outcome of a spin is handled differently, and that difference can also mean differences in when you get a tax form.
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