AGA Calls for Higher Jackpot Win Reporting Threshold

  • The reporting threshold for a slot jackpot win has stood at $1,200 since 1977
  • Winners of prizes exceeding that figure must submit a W2-G form to the IRS
  • AGA chief Bill Miller believes this change is necessary as casinos reopen post-pandemic
  • The association estimates that the threshold would be higher than $5,000 if adjusted for inflation
smiling man and woman playing at slot machine
The AGA wants the current threshold for reporting slot jackpot wins to be increased from $1,200 to reflect inflation. [Image: Shutterstock]

Government urged to update “antiquated” figure

The American Gaming Association (AGA) is calling on the United States government to increase the threshold for reporting slot jackpot wins. Current rules state that jackpot slot machines have to be put out of production until the jackpot winners have submitted the relevant tax reporting form. 

The threshold for reporting a jackpot win of this kind stands at $1,200. If a player pockets a bigger jackpot prize, they have to submit a W2-G form, according to the protocol that has been in place since 1977. 

current threshold is outdated and imposes significant compliance burdens”

AGA chief executive and president Bill Miller highlighted in a press release that the increase would be especially important now that casinos in the country are beginning to reopen following mandatory pandemic closures. All 989 tribal and commercial casinos across the country have been shut down for two months.

He said: “The current threshold is outdated and imposes significant compliance burdens on both the Internal Revenue Service (IRS) and the gaming industry.” The title of the press release also referred to it as “antiquated”.

The AGA presents its arguments

The AGA argues that if the threshold limit of $1,200 from 1977 had to be adjusted for inflation, the current starting point would be higher than $5,000. It pointed out that the number of reportable jackpots has increased significantly in recent years, while the threshold figure has remained the same.

current starting point would be higher than $5,000

If the threshold was increased, the IRS could also focus its limited enforcement resources on taxpayers who are likely to have net slot winnings at year end. Miller touched upon how the large amount of submitted forms each year only floods “an under budgeted and understaffed IRS each year.”

The proposed revision would also limit social interactions between gaming patrons and employees for the issuance of tax forms, helping to curb the spread of COVID-19.

Miller stated that the policy change is long overdue and has received bipartisan support from Congressional members.

A catalyst for the proposal

This latest request from the AGA comes after President Donald Trump issued an executive order on May 19 related to post-pandemic economic recovery.

The Executive Order on Regulatory Relief to Support Economic Recovery requests that federal agencies help the country to minimize the economic fallout of the pandemic as much as possible. This would be through removing, altering, waiving, or offering exemptions from certain requirements and regulations that could inhibit economic recovery. 

In 2019, the AGA lobbied the US Treasury Department’s assistant secretary of tax policy, David Kautter, on the issue. Nevada Republican Representative Dina Titus and Democratic Illinois Representative Darin LaHood both wrote to him, pushing for a threshold increase. However, their efforts were not successful.

The IRS tried to lower the threshold to $600 in 2016 but was persuaded otherwise by the AGA. The plan was to utilize player loyalty cards to electronically track the wins of a given player.