Progressive Slots – The Big Payers in the Casino

There is an interesting correlation between how casinos market their games and the payout percentages of those games. As a general rule of thumb, titles with low house edges and high player returns – such as craps, baccarat, and blackjack – are seldom featured in promotional campaigns.

Larger casinos may run dozens, even hundreds, of these tables, but they rarely, if ever, highlight them in their advertising. From an operator’s standpoint, table games are simply less profitable and therefore not worth the marketing effort.

The situation is entirely different with progressive slots. Jackpot winners are always prominently showcased in promotional materials and serve as bait to attract unsuspecting players. The same strategy is employed in both online and land-based casinos, which proudly trumpet the huge wins of progressive-slot players to lure new patrons.

The bottom line: gambling operators are quick to publish press releases about progressive winners, but you can be certain the games they promote most aggressively are heavily tilted in the house’s favor.

One important thing to remember is that gamblers owe taxes on larger winnings in some jurisdictions, including the USA.

In Nevada, for instance, the IRS (Internal Revenue Service) requires gambling operators to withhold taxes when a player wins more than a certain amount, with the rate ranging from 25% to 30%.

Whether the winner is a U.S. citizen or a foreign national also matters. The rate drops to 25% when winnings exceed $5,000.

If your profits surpass the stipulated threshold, the casino will ask for your Social Security Number (SSN) or Taxpayer Identification Number (TIN). You will then receive a W-2G form indicating the amount won and the tax withheld.

At the end of the year, the winner must file a 1040 form with the IRS to report their annual income. Gambling profits are considered taxable income in the United States, but only if they exceed $1,200.

This threshold applies only to winnings from slot machines and bingo. Minimum taxable amounts differ for other forms of gambling – keno ($1,500+), poker ($5,000+), and horse-track betting ($600+).

Table games such as blackjack and roulette are different because casinos find it harder to track the amount you buy in for. Consequently, it becomes difficult to determine your precise taxable gain, i.e., your net winnings.

This ambiguity leads some table-game players to skip reporting small-scale profits. Our advice to U.S. slot players is to declare every dollar of gambling income to the IRS, whether it is $500 or $50,000. The IRS rarely hunts down small winners, but you still do not want to risk tax evasion.

Across the pond, in countries like the UK, all casino goers – including slot players – are exempt from taxes on their gambling profits, regardless of whether they win £100 or £13 million.

In the UK, winnings from all forms of betting are not considered taxable income for either casual players or professionals. Only UK-licensed gambling operators are required to pay annual taxes to the country’s budget.

But there is a silver lining: U.S. slot players have the legal right to deduct some of their gambling losses. The procedure differs for recreational and professional gamblers.

The catch is that you cannot claim a deduction if your gambling losses exceed your winnings. The two must be reported separately to the IRS; you may not simply subtract your losses from your winnings and report the net amount.

Losses are not deductible if you have not reported any gambling income. From the IRS’s perspective, allowing such a deduction would essentially subsidize the taxpayer’s gambling activities.

Needless to say, you are expected to keep meticulous records of your bankroll. As proof, you should itemize and retain betting tickets, bank statements, withdrawal slips, W-2G forms, and similar documents.

For professional gamblers, losses are treated as business expenses. Remember, a professional gambler is someone whose primary objective is to earn a profit from gambling – that is, betting constitutes their main source of income.

To be considered a professional, you must engage in gambling activities continually and with regularity. Sporadic, casual play does not qualify as a business venture.