Question: Do I owe income taxes on slot machine winnings?

Answer: Yes.

You owe income taxes anytime you collect income, which includes gambling winnings. The good news is that you can also deduct the money you spent gambling. But you can only deduct your spending up to the amount of your winnings.

Federal income tax laws require casinos to withhold income taxes anytime you hit a jackpot amounting to over $1,199.00. The casino will send you a 1099 form to report with your filing.

This withholding only applies per jackpot, and not cumulative winnings across multiple games.

Because most people don't keep track of how much money they put into a slot machine, you need to get yourself a player's card for the casino you're playing at. The player's card will keep track of how much money you spent, and earned. You can simply call up the casino, give them the number on your player's card, and they'll send you a paper report of what you spent and earned.

The paper report, of course, will also show the winnings that amounted to less than $1,199, meaning the IRS will tax you on every penny you won. But at least you can offset that with the money you spent.

If anything, it's good idea to play with a player's card just in case you hit a big jackpot.

Labels: Slot-Machine-General

"Jogburg" sent me an e-mail today asking about the difference between a "Video Lottery Terminal" and a slot machine...

Yes,

I would like to get a definite answer to what is the difference between a Video Lottery Terminal and a slot machine.

My understanding is that they are very similar, that is they are both controlled by the RNG.

Is it true that the VLT machines are nothing more than a scratch off lottery as such, that is. That they are controlled by the Lottery commission and not the Gaming commission, and that VLT have RNG's in each machine, but their outcome is determined by a central computer at the lottery headquarters.

Where as regular slot are controlled by a per-programmed RNG that is installed in each machine and that the RNG can not be tampered with or changed unless there is a malfunction in the chip/and or machine. And that the casinos, slot parlors, or racinos do not tie the machine into a central computer where they can change the outcome of the game in progress.

Thanks, I appreciate your response.

Video Lottery Terminals are what the gaming industry refers to as "Class II machines". The Las Vegas style slot machines you're comparing them to are "Class III machines".

You pretty much nailed the primary difference, in that a group of Class II machines are controlled by one central computer. Whereas each Class III machine has its own computer picking out numbers.

Both Class II and Class III machines rely on random number generator, except with a Class II machine, that RNG is running inside of a central computer, located at the casino. That central computer is not located at a Lottery commission, as you asked. However, these machines are in fact monitored by the government using a separate computer, to ensure casinos are running them according to law.

In the states and jurisdicions I'm familiar with, Video Lottery Terminals are not connected with a state lottery system. They use the word "lottery" because it mimics a lottery. That is, across all VLTs within a single casino, there is a predetermined number of winners.

You're actually playing "Bingo", where each spin of the reels is a bingo card. Legally speaking, that's exactly what it is, Bingo. It allows indian reservations to offer something that looks and feels like a slot machine, but meets the laws and regulations of Bingo.

Labels: Slot-Machine-General

Taz asks the following questions, one about a slot machine called, "Reel Magic", and another about a computer program called, "Blue Shark"...

Hey there, im currently living in Melbourne, Australia. I used to live in Greece a few years back and used to play on the slots there. The majority of them were called "Reel Magic". Ive tried looking them up on the net with no luck. If you have any details about the machines im talking about please forward it to me as i would love to finde one.

Also, in Greece, at internet cafe's they had illegal; gambling programs installed on their computers, that if say a police officer or security guard walked in, the attendant would press a button at the main desk, and all the machines would go back into computer mode. I would really love to find an emulator of the program or something similar for some fun at home. All the slots and other casino programs that i have tried are pretty crap compared to the ones in Greece. The ones i played at the internet cafe's were called "Blue Shark". PLease help! :)))

Click on Post a Comment if you know anything.

Labels: Slot-Machine-General