For decades, the IRS has required casinos and players to report slot machine winnings of $1,200 or more on Form W-2G. While this threshold has remained static since 1977, inflation and changes in the gaming industry have made it outdated. Recently, there has been discussion about increasing the jackpot reporting threshold to $5,800, and it’s a change that’s long overdue. Here’s why raising the limit makes sense for both players and the industry. The Shifting Limits on Thresholds (SLOT) Act was introduced in 2023 you can track it here H.R.3125.
The Problem with the $1,200 Threshold
When the $1,200 threshold was introduced in 1977, it reflected significant winnings at the time. Adjusted for inflation, that $1,200 would be equivalent to over $5,000 today. However, the reporting limit has remained unchanged, creating unnecessary headaches for players and casinos alike.
Casinos are now filled with high-denomination machines and progressive jackpots, meaning even modest wins can trigger the $1,200 threshold. A win that once felt substantial now requires players to stop their play, wait for casino staff to complete the necessary tax forms, and possibly lose the momentum and excitement of their session. This delay not only disrupts the player’s experience but also affects casino efficiency.
How This Impacts Players and Casinos
1. Player Experience
Modern slot machines often offer frequent payouts that hover around or just above the $1,200 mark. As a result, players must repeatedly fill out tax forms for relatively modest wins. This process can be frustrating, especially for those who play regularly. It also unfairly penalizes players who reinvest their winnings into further play, as they must still report every individual jackpot.
2. Operational Strain on Casinos
Casinos must employ staff to handle these frequent jackpot tax forms, adding to their operational costs. This is especially burdensome during peak hours when employees could be assisting other players or improving overall service. Raising the threshold would reduce the frequency of these interruptions, allowing casinos to allocate resources more efficiently.
3. Revenue Impact on States
Some worry that raising the threshold might reduce state tax revenue. However, it’s important to note that higher thresholds would still ensure significant jackpots are reported, while small wins—often reinvested or spent locally—would flow back into the economy.
Why $5,800 is the Right Number
A proposed threshold of $5,800 aligns with inflation and better reflects today’s economic realities. This adjustment would reduce the burden on players and casinos without significantly impacting tax compliance. Larger wins would still be reported, ensuring the IRS continues to collect the revenue it needs.
Additionally, other gambling thresholds, such as those for table games and sports betting, often involve higher limits or different reporting methods. Aligning slot jackpots with these thresholds would create consistency across the industry.
The Time for Change is Now
The gaming industry has evolved dramatically since the 1970s, and the tax rules governing it should evolve as well. Raising the jackpot reporting threshold is a common-sense move that benefits everyone involved—players, casinos, and even the IRS, which would save resources currently spent processing countless small wins.
If you’re a player who loves hitting the slots, this issue affects you directly. By advocating for a higher threshold, we can push for a gaming experience that’s less frustrating, more enjoyable, and reflective of today’s realities. Let’s urge policymakers to take action and finally bring these outdated tax rules into the 21st century. A recommendation from IRS Advisory Council even suggested the amount should be raised to $5,800.
If you agree you can make your voice heard by contacting your local representative here
You can also sign a petition at change.org.
What’s your take on the $1,200 threshold? Share your thoughts below!