Gaming officials are criticizing proposed regulations that would modify the reporting of winnings from slot machines, bingo and keno.
Since 1977, IRS regulations have required information reporting on winnings of $1,200 or more from a slot machine or bingo game and $1,500 (net of the wager) for a keno game. Winnings are reported on Form W-2G, Certain Gambling Winnings.
In a discussion of the proposed regulations, the IRS requested comments on lowering the information reporting thresholds to $600 and providing a separate reporting threshold for electronically tracked slot machines.
Proposed regulations do not have the effect of law. For at least a 30-day period, interested parties can comment on a proposed regulation before it becomes a final regulation.
As a result of these comments, the IRS may make changes to a proposed regulation before it becomes a final regulation. Final regulations have the effect of law.
Right now an electronic slot machine generates a W-2G only if you win $1,200 or more on a single play. The machine does not track if you win this amount or more during a single session. A single session is defined as a calendar day.
The proposed regulations would change the current regulations to require reporting if winnings are $1,200 or more during a single session.
Officials from the American Gaming Association (AGA) are against these changes. They say that the casinos at the present moment do not have an information tracking system that is sophisticated enough to accumulate the required reporting information for the $600 threshold.
The AGA is also against referring to a session as a calendar day. They feel these changes will increase labor costs for casinos, discourage customers from playing and have little effect on tax revenues.
A leader for an American Indian tribe states that the regulations violate Executive Order 13175, which requires government agencies to discuss the impact of their proposals on tribal governments and to consult with tribes before taking action.
Other groups involved in the gaming industry say that the IRS regulations need to be modernized. However, they express concerns about the ability of the industry to properly calculate the amounts needed for the information reporting under the lower thresholds.
It will be interesting to see what the final regulations look like with many stakeholders in disagreement about the direction the reporting thresholds should go.