Digital Wager Wire highlights the most important events impacting the domestic and international sports betting and gaming industry each week throughout the year.
Budget Bill Includes Slot Hand Pay Increase
It has been since 1977 when the IRS included the mandatory tax forms given to those who hit a slot machine win in excess of $1200. Much has happened in the nearly five decades since that tax obligation, including inflation, which is why many legislators and slot players in gaming states have been advocating for an increase in the tax reporting threshold.
New Limit Brings Partial Relief
President Trump’s recent budget bill is a bit of relief for the first time in decades, and although it is far from the $5800 minimum threshold many were hoping for, it is at least a step forward. Beginning on January 1st of this year, those who hit a slot win of $2000 or more will see their machines frozen, an attendant alerted, and will be hand paid while filling out the obligatory tax forms.
Furthermore, the threshold will increase each year with the rate of inflation. Specifically, according to Section 70433 of the new budget plan, the exemption increase beginning in 2027 will be determined by multiplying the amount of the win by the cost-of-living adjustment determined under the act for each calendar year and then rounding to the nearest multiple of $100.
Legislators Push for More Meaningful Reform
Although it is an $800 increase from the previous minimum threshold, many legislators in gaming states are disappointed in the modest increase, and Congresswoman Dina Titus of Nevada and Congressman Guy Reschenthaler of Pennsylvania, co-chairs of the bipartisan Congressional Gaming Caucus, are two who have been very vocal about the change.
Both have sponsored the Shifting Limits on Thresholds (SLOT) Act, calling for a $5000 exemption. They believe it is time for an increase, which will allow players’ machines to continue to whir and give attendants much-needed relief from the relatively modest payouts.
“Updating a Reagan-era gaming regulation is not just a priority for my constituents in Las Vegas; it is a commonsense fix that affects the growth of legal gaming in local and tribal communities across the country,” Rep. Titus said. “Shutting down slot machines for low-dollar amounts pushes people toward the illegal market, and flooding the IRS with automated, outdated forms helps no one. This legislation will ease the paperwork burden on businesses and players while ensuring our tax code reflects economic reality.”
FAIR Bet Act Seeks to Restore 100% Gambling Loss Deduction
President Trump’s Big Beautiful Bill has not been welcomed as such by gamblers and legislators in gaming states that are taking issue with a decrease in gambling losses come tax time. Historically, gamblers have been able to write off 100% of gambling losses, but beginning in January, they will only be able to write off 90% of those losses.
Impact of New Rule on Break-Even Gamblers
This becomes a big deal for people who lose thousands of dollars and want every bit of that money written off. For example, before, a person who lost $10,000 in a year but won $10,000 would not be responsible for any taxes because they broke even and there was no gain.
However, under the present bill, that same person would pay taxes on $1000 of gambling winnings, assuming they lost $10,000 and won $10,000, which would mean they could write off only 90% of the $10,000 loss, which is $9000. When considering the $10,000 win, we would subtract $9,000 (not $10,000 as before when it was 100% of losses), leaving a balance of $1,000.
FAIR BET Act Aims to Reverse New Tax Provision
That has not sat well with U.S. Representative Dina Titus from Nevada’s first district, which includes parts of Las Vegas. Representative Titus has thus created the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act, which would restore the 100% tax deduction for gambling losses.
“The recently passed budget bill included a provision inserted by Senate Republicans without consent of the House that imposed a tax increase on Americans who gamble by reducing from 100 percent to 90 percent the amount of losses they can deduct from gambling winnings for their income taxes,” Titus said in a release. “My FAIR BET Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won.”
