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IRS Considers Lowering Limits for Taxes on Gambling

Posted on in Taxation Law

Gamblers have been eligible to pay taxes on their winnings for years, and must pay taxes on each dollar that they win on all kinds of gambling. That includes not just slot machines in casinos, but also winnings on sports bets.

 

At a slot machine, only winnings above $1200 must be reported to the IRS. However, the Internal Revenue Service has admitted that it is toying with the idea of lowering that limit to $600. Predictably, that has generated outrage in the gambling community. It's not just gamblers who are opposing those proposals. The casino industry is also opposing that lowered threshold for reporting earnings at slot machines.

 

According to the American Gaming Association, which is the main lobbying arm for the industry, implementing any such change would be very expensive for the industry. All slot machines at casinos would need to be updated to ensure that tax forms are submitted to gamblers as soon as they hit the taxable threshold. Besides, initial costs would also include labor costs. According to Caesars Entertainment, that additional labor could cost an additional $18 million per year.

 

The proposal to lower the gambling taxable threshold was included in a full set of proposals by the Internal Revenue Service, as an update to regulations that were put in place several decades ago. For instance, the proposal includes simpler procedures for tax reporting at racetracks. This is something that horseracing enthusiasts have long been calling for. Additionally, casinos would also be required to use electronic play cards, to track daily play, which would lead to a reduction of the winnings that casinos are required to report to the tax agency.

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