Progressive Slots – The Big Payers in the Casino

There is an interesting correlation between the way casinos market their games and the payout percentages of said games. As a general rule of thumb, games with low house edges and high player returns like craps, baccarat, and blackjack are never prominently featured in promotional campaigns.

Larger casinos operate dozens, even hundreds of such tables but rarely, if ever, would make a point of harping about their availability. Table games are simply not as profitable from the perspective of a gambling operator and therefore, are not worth the effort.

This is not the case where progressive slots are concerned. Jackpot winners are always prominently featured in promotional campaigns and are used as a bait to attract unsuspecting players. Such is the case in both online and landbased casinos. They are harping about the huge wins of progressive slot players, using them as attention magnets for new patrons.

The bottom line is gambling operators are always quick to issue press releases about progressive winners, but you can feel confident the games they rave the most about are heavily titled in favor of the house.

One important thing to keep in mind is that gamblers are taxed for larger winnings in some jurisdictions like the USA.

In Nevada, in particular, the IRS (Internal Revenue Service) requires all gambling operators to withhold taxes if a player wins more than a certain amount, with the percentage ranging from 25% to 30%.

Whether the winner is a citizen of the country or a foreign national is also taken into account. The tax drops to 25% if the winnings are higher than $5,000.

Provided that your profits exceed the stipulated threshold, the gambling operator would ask you to give them your Social Security Number (SSN) or your Taxpayer Identification Number (TIN). The operator would then provide you with a W-2G form with the amount won and the amount withheld from it for tax purposes.

At the end of the year, the winner is expected to fill out a 1040 form and send it to the IRS to report their annual income. Gambling profits are considered part of a citizen’s taxable income in the United States but only if they exceed a threshold of $1,200.

This threshold applies only to winnings registered on slot machines and bingo games. Minimum taxable amounts vary for other forms of gambling like keno ($1,500+), poker ($5,000+), and horse track betting ($600+).

Things are different with table games like blackjack and roulette because it is more difficult for the casinos to track down the amount you bought in for. In turn, this makes it difficult to determine your precise taxable gain, i.e. the amount you have generated in net winnings.

This causes some table games players to skip on reporting their small-scale gambling profits. Our advice to US slot players is to always declare all their gambling profits with the IRS, regardless of whether they amount to $500 or $50,000. The IRS does not make a habit of hunting down small-scale casino winners but you still do not want to be guilty of tax evasion.

This is not the case over the pond in some countries like the UK where all casino goers, slot players included, are not taxed on their gambling profits. It matters not whether you have won £100 or £13 million.

Either way, winnings from all forms of betting are not considered a taxable income. This applies to both casual players and professional gamblers. Only UK-licensed gambling operators are expected to contribute annual taxes to the country’s budget.

But there is a silver lining because US slot players also have the legal right to reclaim some of their gambling losses. The procedure is different for recreational and professional gamblers.

The catch here is that it is impossible to reclaim anything if your gambling losses exceed your winnings. The two are reported separately to the IRS. A player is not allowed to simply subtract their gambling losses from their winnings and report the net amount to the IRS.

Losses cannot be reclaimed if the player has not registered or reported any profits. From the IRS perspective, this would be equal to subsidizing the taxpayers’ gambling activities.

Needless to say, one is expected to keep a good track record of their betting budget. As proof, you need to itemize and present betting tickets, bank statements, withdrawal slips, W-2G forms, and other documents.

With professional gamblers, the losses are considered business expenses. Here it is important to remind slot players that a professional gambler is one whose primary purpose is to turn a profit when playing, i.e. betting is their main source of income.

One must engage in gambling activities continually and with regularity to be considered a professional. Sporadic casual play does not qualify as a business venture.