.svg)
A tweak to the tax bill signed by President Donald Trump would modernize gaming tax policy by increasing the threshold for reporting jackpot wins on slot machines and video lottery terminals in casinos.
While most of the industry’s attention last week was focused on a failed effort in the U.S. Senate to overturn a controversial provision in H.R. 1, also known as the “One, Big, Beautiful Bill,” that limits declarable losses for gamblers, industry lobbyists on Tuesday (July 15) welcomed the amendments to lift the threshold amount to $2,000.
The decision to increase the threshold will undergo regulatory rulemaking at the U.S. Department of the Treasury before a final version is added to the U.S. tax code.
An increase to $2,000 would be effective for payments made after December 31, 2025. For the years 2026 and beyond, the threshold amount will be increased in line with inflation, according to Section 70433 of the tax bill.
That increase will be calculated by multiplying the current amount by the cost-of-living adjustment determined under the act for each calendar year and rounded to the nearest multiple of $100.
Chris Cylke, senior vice-president of government relations with the American Gaming Association (AGA), said the increase to the slot machine reporting threshold was a “hard-fought win” for the gaming industry.
“Raising the slot machines tax reporting threshold to $2,000 and indexing it to inflation is a long-overdue modification that reduces regulatory burdens and improves the customer experience,” Cylke said in a statement.
Regulations established in 1977 required casinos to issue patrons a W2-G tax form whenever they win a slot machine jackpot of $1,200 or more. The AGA acknowledged the level set almost 50 years ago was reasonable at the time, but that amount has not kept up with inflation.
At the time the threshold was established, Nevada was the only state with legalized gambling. New Jersey voters had legalized casino gambling in Atlantic City in 1976 with Resorts Atlantic City being the first resort to open in 1978.
There are now 44 states with either commercial casinos or casinos operated by Indian tribes.
Because the threshold has not kept up with inflation since its inception, the policy has led to a dramatic increase in the number of reportable jackpots, which has increased operations costs for casinos, their patrons and the Internal Revenue Service (IRS).
"Increasing the slot reporting threshold to $2,000 is an improvement,” Virginia Valentine, president and CEO of the Nevada Resort Association, said in an email.
“We would like to see a bigger step forward that aligns with the IRS Advisory Council's recommendations of at least $5,000, if not more, given the threshold has been at the same level for nearly 50 years.”
In November, the IRS Advisory Council said the threshold figure should be raised from $1,200 to $5,800, $800 more than what Representative Dina Titus, a Democrat from Nevada, and Representative Guy Reschenthaler, a Republican from Pennsylvania, have been seeking.
The council noted that the change should be made by regulatory action because that was how the $1,200 threshold was initially established.
Titus and Reschenthaler, co-chairs of the bipartisan Congressional Gaming Caucus, filed H.R 3125, known as the Shifting Limits in Thresholds (SLOT) Act, in May 2023 that would have raised the threshold for slot machine winnings to $5,000 and indexed it to inflation. The bill went nowhere during the 118th Congress.
Then in March, Titus and Reschenthaler reintroduced the SLOT Act but H.R. 2233 has made no progress beyond being initially referred to the House Ways and Means Committee. Neither Titus nor Reschenthaler responded to requests for comment.
“Modernizing the threshold would be welcomed by guests and the resort industry as it would reduce paperwork and streamline the process for certain jackpots,” Valentine said. “Any time you can make a process smoother and more efficient, it enhances the overall customer experience and increases the likelihood of a return visit.”
Tax Loss Deduction Debate
Another bill introduced by Titus was also referred to Ways and Means in the House, but the committee has yet to schedule a hearing on H.R. 4304, also known as the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act.
The bill attempts to permanently restore the 100 percent loss deduction for gamblers. The budget bill, which was signed into law by President Trump on July 4, included a provision reducing to 90 percent the amount of losses those who gamble can deduct from gambling winnings for their income taxes.
The gambling tax code change goes into effect in 2026 and will not affect gamblers' tax returns for the 2025 tax year. The change is expected to bring in about $1.1bn more in revenue compared to continuing the current policy, according to Joint Committee on Taxation estimates.
“This common-sense legislation will bring fairness back to gaming taxation, making sure that gamblers can fully deduct losses when they report their winnings. It gives everyone, from recreational gamblers to high-stakes gamblers, a fair shake,” Titus said in a statement.
An effort in the U.S. Senate last week to reverse the tax hike by a universal consent measure came up short due to opposition from Republican Senator Todd Young, of Indiana, who had sought to add an exemption of religious colleges from the federal endowment tax.
