Government Tax Forms (W-2G)

Smart Choice CasinosGiven the difficulty of the geolocation, payments and social security number, it’s likely as with any new industry or product launch the market is still catering to the innovators and early adopters (as per the product diffusion curve). Innovators and early adopters tend to spend more as would likely comprise a portion of an online casino’s high value player. So why does this matter? Back in the early days of large scale gambling in Vegas and Atlantic City, a typical floor was 2/3 table and 1/3 slots. This is now likely the case online with the majority of the smaller number of high value players playing blackjack and to a lesser extent roulette. Typically, withholding tax and W-2G forms are relevant when winnings (less the wager) are more than $5,000 and the winnings are from Sweepstakes, Wagering pools, and Lotteries or if the winning is greater than 300x the amount wagered. The casino reports the amount of the winnings and any tax withheld on Form W-2G, which is issued to the winner and to the IRS.  Casinos will also issue a Form W-2G when withholding is not required, specifically if the player wins over $1,200 from slot or bingo, $1,500 from Keno games, or $5,000 from poker tournaments.

The controversy here is that because table games such as blackjack and roulette are not in a live setting, the use of a random number generator leaves the definition of an online table game up to the discretion of the compliance of the land based casino and the legal advice of their counsel.  Is the fact that the blackjack or roulette game is using an RNG now classifying it as a slot? It is unclear. Each casino makes their own determination. Now, for a land based slot player, they are used the process. Land based, if a slot player triggers a win of over $1,200 in a casino, typically an employee would need to come to the machine and the W2-G paperwork is taken care of at the time. Not the same for a blackjack player. If a high value blackjack wins over $1,200 on the casino floor then they are required to report their overall winnings but not issued a W2-G at the time of winning. However, if that same player is now playing online and wins the same $1,200 at one of online operator’s casino who has determined that the RNG of blackjack is classified as a slot, then the player who is not accustomed to triggering the W2-G has their account locked until the initial paperwork is taken care of and is likely not too happy.

This is the first part of a multi-part series.  Future series of What’s Really Plaguing New Jersey? We will discuss content variety, mobile web, enforcement & the black market, DGE marketing approvals, operator customer service, promotional gaming credits.

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