Why Are Table Games Taxed Differently Than Slots?

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Roulette table view from side of the wheel

Players who avail themselves of both slots and table games and who bet high enough know that the rules are different between slots and table games when it comes to tax paperwork on a big win. One player had a fair question:

Why do you have to pay taxes on a slot handpay but not on table game winnings over $1,200?

Michael L.

The difference comes down to the rules set for each – the IRS doesn’t have a consistent requirement between the two types of gaming. Table games don’t solely have a fixed dollar amount threshold like slots do. Instead, a W2G tax reporting document is generated when two rules are met:

  • The win is at least $600
  • The win is at least 300x your bet

That latter rule is a pretty hard thing to accomplish on a table game on its own. Playing Blackjack, for instance, you’re not going to ever see that happen on the main hand wager. It’s possible on the top payouts of certain side bets, but those would be rare.

Roulette, same thing – the payouts cap at 35 to 1, so you’re simply not going to reach that 300x your bet rule on any standard bets on a roulette table.

Craps, you’d have to look towards something like the Fire Bet, which would take all six different point numbers being made – a tall feat, but theoretically possible – to trigger the threshold.

What makes the rules even more complicated is that electronic table games follow the rules for slots, since they’re video machines. So if you’re betting high enough to get a $1,200 win on an electronic table game, regardless of the wager, you’d get a W2G. So keep that in mind if you’re going to play on an electronic version.

This weird frankenmonster of a rule set pops up in other ways too – electronic Keno on a video poker machine will yield a taxable jackpot at $1,200, but playing live Keno in a casino the threshold is slightly higher at $1,500. And playing state lottery Keno will often mean a $600 prize is reported, because it follows the state lottery rules instead.

Would switching slots to follow the table games rule improve things? Well, 300x bonuses aren’t incredibly common, but they’re not particularly rare either, and you could hit $600 and 300x your bet on a $2 wager, which likely would create more IRS reporting scenarios for lower betters while reducing the frequency for higher betters. 

That may not yield better results than what we have now in terms of reducing paperwork, so perhaps raising the jackpot threshold remains the best option.

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