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Why is $1,200 the threshold for a W-2G?

20 July 2009

Hi,

I was wondering how the government came up with $1,200 as the magical amount that can be taxed. I was lucky enough to hit a royal for $1,050 and didn't have to fill out any paperwork.

Thanks,
Colleen

Dear Colleen,

Congratulations on your royal!

Some players take taxes into account when choosing a machine to play. They won't play machines with jackpots over $1,200 just to avoid the paperwork. Of course, we all report our net winnings when we have a profitable year playing the slots, so it doesn't really matter whether we get the paperwork, right?

Flippant statement aside, the W-2G is one of the most unfair aspects of gambling and taxes because players can't offset winnings with losses on a dollar-for-dollar basis.

The story may be apocryphal, but this is what a Las Vegas slot director told me about how the $1,200 threshold came about. He said that the government and casino industry negotiated the amount about 40 or so years ago when it was fairly rare that a slot jackpot was that large, so the paperwork wouldn't be a burden on the casino.

The threshold has never changed despite the fact that $1,200 jackpots are fairly commonplace now. Considering that the threshold wasn't raised when the government had record surpluses, you can bet that there's very little chance it will be raised now that we have record deficits.

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