Big wins at the casino happen regularly. And when they do happen, you’re going to have to pay taxes on your winnings. It may soon become easier to track and report not only your jackpots but also your losses.
When you win $1,200 or more on a slot machine or video poker machine, an attendant will bring you your winnings in person. This is called hand pay. The machine stops working until you receive your money. It happens because the casino must report any winnings of this amount to the Internal Revenue Service (IRS).
In the United States, the IRS requires you to report any single win of $1,200 or more from a slot machine, video poker, or bingo game. For keno, this amount is $1,500. This rule applies to a win from one spin or game, not your total winnings for the day or from the machine.
But steps are now being taken to either make the process easier, and/or raise the amount.
Automated Win/Loss Statements for Casinos
Celebrity Cruises and Royal Caribbean cruise line recently introduced a new system for automated win/loss statements.
Legally, you must report all casino winnings as taxable, and you can deduct losses from any winnings. However, most players don’t report small wins to the IRS or keep track of their losses to offset those winnings.
Casinos do track your wins and losses if you log into their loyalty program while playing. By law, they must provide you with year-end win/loss statements, though some casinos make this process easier than others.
Last week, Royal Caribbean's Club Royale casino program emailed registered players to tell them that they can now access their casino win/loss statements from the last 5 years.
You can now download your win/loss statements from 2020 to 2023. Starting on January 31, 2025, you’ll also be able to download your casino statement for 2024.
Entire "Casino Winnings" System May Be Modernized
When a jackpot of $1,200 or more is won at cruise line or land-based casinos, the casino is required to report it to the IRS.
According to the IRS, the payer is required to issue you a W-2G form. This can be for amounts as low as $600.
If you have won more than $5,000, the payer may be required to withhold 28% of the proceeds for federal income tax. However, if you did not provide your Social Security number to the payer (casino), the withholding amount will increase to 31%..
After verifying the winner's ID and tax information, the casino will issue a W2-G form for these "jackpots." However, some state tax agencies have complicated things, so the amount can be lower if the state decides to reduce it.
But House Chief Deputy Whip Guy Reschenthaler (R-Pennsylvania) and Rep. Dina Titus (D-Nevada), who lead the bipartisan Congressional Gaming Caucus, are working to update the entire system.
Amount For Big Casino Wins May Increase
They explained in a letter to the IRS that the current rule, which requires a W-2G tax form for winnings of $1,200 or more, hasn't changed since 1977, despite the rise in the number of these forms filed each year. They argued that inflation has made this outdated rule a burden for taxpayers and has increased costs for casinos nationwide.
They're advocating to raise the reporting threshold to $5,000 and to regularly adjust it according to inflation. Although IRS officials have responded positively to this proposal, no action has yet been taken to implement these changes. Congress has talked about increasing this amount, but no specific legislation has been enacted yet.
So, big wins at the casino are great, but reporting them to the IRS can be cumbersome. The good news is that it appears steps are being taken to make the entire process easier and more efficient.
