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Best of John Robison

Gaming Guru

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An overlooked W-2G

1 October 2007

"The page on the IRS website says that the casino has to report wins of $1,200 or more on a single wager. Accumulating more than $1,200 in winnings or even just cashing in over $1200 is not a reportable event.

"Unbelievably, I have heard of casinos filling out a W-2G whenever a player cashed in $1,200 or more. These incidents occurred in areas in which gaming was relatively new at the time and I suspect they just misinterpreted the rules. I haven't heard of it happening recently."

I just got home from Vegas and have a great story to tell. My sister and her husband were playing Let It Ride at Green Valley Ranch last Thursday afternoon. The man seated next to my sister was on a losing streak, down to his last chips. He laid them out, betting $5 on each circle, plus a $1 side bet and a 3-card bonus bet. He said he was not going to even look at his cards. He'd been losing up until now, figured he'd lose again with these last chips and had nothing left to lose, so he would just take his chances and let it ride. Everybody thought he should at least look, but he apparently felt things could not get any worse, so he refused to look at his cards and let his bet ride.

The dealer came up with two low hearts. Instead of turning the player's hand all at once, as she usually did, she turned up this player's hand one by one. A heart turned up -- three to a straight flush. Everybody said, well, maybe you'll get a flush, but nobody expected what would come. Another low heart — four to a straight flush.

Well, by now of course you know what happened next. The dealer turned over the last of the player's cards and revealed a straight flush.

The player won 200:1 on his $15 bet: he won $3,000. Plus, his $1 side bet paid another $2,000. And his 3-card bonus bet got him a little more. He left the table with a $5,000+ win. Everyone at the table (and at nearby tables) was so excited, someone forgot about taxes. My brother-in-law had to remind the excited player to tip the dealer, and then the player promptly (and smartly!) left the table, never to be seen again.

I arrived to join my sister at the table shortly after this win. The dealer was still talking about it. The pit boss changed shift, and the new boss came by to ask what happened — and said she sure was glad she wasn't the one who forgot to fill out the tax forms before the player left. The player had promptly collected his winnings and disappeared, before anyone thought to have him fill out any tax forms.

The winning hand took everyone by surprise, including the dealer who was still reeling and said she didn't even know how to pay out such a big win on a low-minimum game. A new dealer came in and she also said she wasn't sure about the rules for such a win. So the player lucked out two ways — with his big win on his final bet, and with escaping the tax forms.

Thanks for the timely clarification on the tax situation. I had read that table games are not taxed but that slots are taxed if the jackpot is over $1,199. Now I understand the single wager tax implication. I was wondering about this as all the dealers and the pit boss were discussing the problem and all seemed confused after this player's win. Apparently even some of them are not clear on the single wager vs. overall win situation.

At any rate, there is some really happy guy out there bragging to his friends how he won $5,000 on Let It Ride last week!

The $1,200 threshold is for slot winnings. The reportability of table game winnings is more complicated.

As far as I know, table game winnings with payoffs of 300 to 1 or more are reportable and the amount won is $600 or more. You didn't say how much the three-card bonus was or how much it paid, but it's possible that the total payout was less than 300 times the wager. And I think you have to look at the total winnings and the total wager because a player can't make the side bet without also making the base bet.

So, I'm not sure that a W-2G was required in this case. But I am sure that the IRS expects the player to report the winnings on his tax return.

Best of luck in and out of the casinos,
John


Send your slot and video poker questions to John Robison, Slot Expert, at slotexpert@comcast.net. Because of the volume of mail I receive, I regret that I can't reply to every question.

John Robison

John Robison is an expert on slot machines and how to play them. John is a slot and video poker columnist and has written for many of gaming’s leading publications. He holds a master's degree in computer science from the prestigious Stevens Institute of Technology.

You may hear John give his slot and video poker tips live on The Good Times Show, hosted by Rudi Schiffer and Mike Schiffer, which is broadcast from Memphis on KXIQ 1180AM Friday afternoon from from 2PM to 5PM Central Time. John is on the show from 4:30 to 5. You can listen to archives of the show on the web anytime.

Books by John Robison:

The Slot Expert's Guide to Playing Slots
John Robison
John Robison is an expert on slot machines and how to play them. John is a slot and video poker columnist and has written for many of gaming’s leading publications. He holds a master's degree in computer science from the prestigious Stevens Institute of Technology.

You may hear John give his slot and video poker tips live on The Good Times Show, hosted by Rudi Schiffer and Mike Schiffer, which is broadcast from Memphis on KXIQ 1180AM Friday afternoon from from 2PM to 5PM Central Time. John is on the show from 4:30 to 5. You can listen to archives of the show on the web anytime.

Books by John Robison:

The Slot Expert's Guide to Playing Slots