Can someone give me the condensed version?

[chayton]

Ok to be honest, I haven't been following the whole story about online casinos and the US market because although I'm a US citizen, I don't live in the US anymore. I understand that some 14 states are completely banned, some software providers (Playtech) are banned for everyone in the US, and some MGS casinos are and some aren't and the thing with progressives and new games. But there are a couple things I don't get, and I don't really want to try to backtrack through a whole pile of posts to get the gist.

1. First, what's the reason given why online gambling is banned (or partially banned?) in the US? When I lived in the states, the government got about half of any gambling or lottery win. You'd think the US government would be jumping up and down to get half of what everyone cashes out from online. I just read the post by Mousey about the guy from Canada who got busted helping people in the US get paid out appx $350 MILLION. So the government could have made a cool $175 Million if online gaming was legal, right? Or is the issue that the government can't keep track of wins? I seem to recall some politician spouting off about family values or something, but it seems to me it's more about the $$$ right?

2. I know a lot of US players still play at RTG - why is that legal and others aren't? And what about the 14 banned states - can they still play at RTG? And which are the 14 banned states?

If someone could just hit the high points for me, or point me to a post or thread(s) that will answer this for me, I'd appreciate it.

 

[all4greed]

2. I know a lot of US players still play at RTG - why is that legal and others aren't? And what about the 14 banned states - can they still play at RTG? And which are the 14 banned states?

I guessing that RTG casinos don't care where the players come from. I'm in Oregon and can play at any RTG. Not sure about 14 states but these don't allow OLG: Illinois, Indiana, Louisiana, Michigan, Nevada, New Jersey, New York, Oregon, South Dakota, Washington, and Wisconsin. For some reason I was also thinking of Kentucky and Florida but can't verify it.

 

[Simmo!]

1. First, what's the reason given why online gambling is banned (or partially banned?) in the US? When I lived in the states, the government got about half of any gambling or lottery win. You'd think the US government would be jumping up and down to get half of what everyone cashes out from online. I just read the post by Mousey about the guy from Canada who got busted helping people in the US get paid out appx $350 MILLION. So the government could have made a cool $175 Million if online gaming was legal, right? Or is the issue that the government can't keep track of wins? I seem to recall some politician spouting off about family values or something, but it seems to me it's more about the $$$ right?

Here's my understanding. Online gambling - sports betting aside - isn't banned nationwide, only in certain States. The Wire Act of 61 covers sports, while the UIGEA's remit is only to stop payment processors from authorising online gabling transactions. It stopped short of stating a legal position on gambling.

It seems it's all about a) not being able to benefit from tax on gambling offshore b) protecting the interests of local land-based gambling operations and c) stopping money leaving the State/Country.

2. I know a lot of US players still play at RTG - why is that legal and others aren't? And what about the 14 banned states - can they still play at RTG? And which are the 14 banned states?

Gambling at RTG is illegal in the 14 States alledgedly, but RTG allowed operators to make their own decisions on who/who not to take. So some pulled out, some didn't. There is a

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that might help in determining where you can do what.

 

[chayton]

When I was in the states I remember gambling in the B&M casinos and if I won (I think it was anything over $600) I'd have to sign a tax form - so I couldn't NOT declare it. Don't they do something like that at online casinos too for US players?

Forgive me for being thick but I didn't do any online gambling til I moved to Canada so don't know how it works anywhere else.

There is a

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that might help in determining where you can do what.

This table is out of date I think - I lived in Phoenix and there are casinos in AZ.

 

[Simmo!]

When I was in the states I remember gambling in the B&M casinos and if I won (I think it was anything over $600)...

I think it's $1200 now but a US regular can correct me if I'm wrong

 

[ksech]

I'm not sure if it is a nationwide thing, but here in NY it's still $600. Most of the casinos here issue a card (if you choose to use it) which keeps track of your wins and losses, and then they can directly report to the IRS. I believe (and I could be wrong about this as I've never had a win over $600 at a B&M) you still have to fill out a tax form for significant wins.

I only have one casino I can deposit at due to the Master Card issue, but IF I can win there and process to my QT account, I can play at one MG, most Rivals, and almost all RTGs.

The lottery here in NY is SUPPOSED to go to education, but the government has been dipping into this pot.Our school taxes go up and up and schools make cuts like crazy (cutting teaching jobs, aides, extra-curricular activites, etc.). They just ran an article in our local newspaper about property taxes in the nation. NY had about 36 of the top 50 highest county taxes in the nation.
This is the article which ran in our papers.... Link Removed ( Old/Invalid)

The state is so broke, I don't think any politician will be able to fix it. Our defunct politicians have yet to pass the state budget ( I believe it has passed ON TIME once in 25 years). And if I didn't have a good sense of humor, I would be crying right now...my last paycheck (had time off due to minor surgery, so the check was for 28 hrs) the federal and state governments received more than I did by about $30 ($108 for me and $128 for the gov't).

Oops sorry for the slight derail...
So, yes, IMO, it is all about the almighty dollar.

 

[RobWin]

I think it's $1200 now but a US regular can correct me if I'm wrong

For the normal Vegas casinos that is, it is $1,200 per each slot jackpot win. At some of the Indian Casinos such as Harrahs Cherokee, the Vegas type (IGT) and a few other slot brands they have there requires a W-2G form to be filled out for jackpot wins of $600 and above but that is mainly because of the Tribal/State compact that they agreed to when they brought those types of gaming machines onto the floor.

We just published a good article on "Tribal Gaming Casinos ~ Are They "The Red Mans Revenge".... you may enjoy reading. If you check out the article, make sure you watch the short video...
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[chayton]

So if you have to declare gambling WINS, can you also write off gambling LOSSES? Store all your losing lottery tickets for the year....?

And if I didn't have a good sense of humor, I would be crying right now...my last paycheck (had time off due to minor surgery, so the check was for 28 hrs) the federal and state governments received more than I did by about $30 ($108 for me and $128 for the gov't).

oh that sucks, I know what that feels like. I have a friend who was really happy when he got a big fat raise - until he got his next paycheck and it turned out that his salary increase bumped him into a higher tax bracket and he was actually bringing home less than he did before he got the raise! The government was the only one getting more. What a crock.

 

[ksech]

You can only claim in loses what you had in wins ( IF I had gambling losses totaling $5000, but I only had wins totaling $1000, I can only claim losses totaling $1000). This includes scratch off tickets, any type of lotteries, gambling (B&M) wins. At the end of the year you receive a 1099-G (?), untaxed income form to file with your taxes.

 

[RobWin]

So if you have to declare gambling WINS, can you also write off gambling LOSSES? Store all your losing lottery tickets for the year....?

Yes, but only against the amount of documented winnings.
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[LHofsdal]

I am in New York, I live 20 miles from an Indian Reservation casino, and 2 days ago I won a jackpot of 1026 USD on a nickle slot, because it was under 1200 USD I did not have to pay taxes on it. I did not fill out any forms. I am not sure if it is because it was an Indian Reservation casino or not, but I didn't sign anything. Got all the money hassle free. Back in Februrary when I won 9678 USD I had the option of having the federal taxes taken out before I recieved my money. If you chose that option they take 25% right off the top, but you have to pay the state taxes yourself, they do not take that out.

LH

 

[ksech]

I am in New York, I live 20 miles from an Indian Reservation casino, and 2 days ago I won a jackpot of 1026 USD on a nickle slot, because it was under 1200 USD I did not have to pay taxes on it. I did not fill out any forms. I am not sure if it is because it was an Indian Reservation casino or not, but I didn't sign anything. Got all the money hassle free. Back in Februrary when I won 9678 USD I had the option of having the federal taxes taken out before I recieved my money. If you chose that option they take 25% right off the top, but you have to pay the state taxes yourself, they do not take that out.

LH

Did you use your player card in the slotmachine you won on? The casino will report to the IRS this win at the end of the year and you will probably receive a 1099-G for your unreported untaxed income. If you used your card, the casino has all of your information on their databanks (you had to fill out a form to receive the card which included your name, address, SS#, birthdate, etc.).

 

[GrandMaster]

I am in New York, I live 20 miles from an Indian Reservation casino, and 2 days ago I won a jackpot of 1026 USD on a nickle slot, because it was under 1200 USD I did not have to pay taxes on it.

More precisely, you evaded the taxes on it.

 

[LHofsdal]

I just spoke with the casino, I was told that anything under 1200 dollars is tax free, anything over 1200 dollars you have to pay taxes on it. I didn't evade the taxes, they can only take taxes out of your winnings if you fill out the W-2G form. The casino does not report winnings unless they have a W-2G form. I have won 880 dollars 976 dollars many times on these machines and the casino never sent me any forms to claim the winnings. Unless the tax laws have changed just recently, that I do not know. Yes I used my card, that is the only way to play on those slot machines.

On the back of this form is states this:

1.The payer must furnish a form W-2G to you if you received $1,200 or more in gamgling from Bingo or slot machines.

4.$600 or more in gambling winnings EXCEPT winnings from bingo, keno, slot machines and poker tournaments.

I have attached a scan of the back of the W-2G form.
LH

 

[chayton]

Could it be that it's different for every state?

 

[GrandMaster]

From the horse's mouth (

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):
"Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.

A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported, including winnings that are not subject to withholding."

 

[RedAndi]

And also some people can not use the losses to cover the taxes on wins, it depends how you file. Because I don't itemize I was not allowed to use lottery tix and such as losses and got screwed into paying all the tax (And I have a tax preparer, she looked 10 ways to Sunday to try to find a way but it could not be done).

 

[love2winalot]

Hiya: Having worked for the NADN/Tax Ready, and taught by the guy who was the #2 man at the IRS for over 20 years, I will tell it like it, "Really" is.
At the IRS, their job is to collect taxes on everything. At NADN, their job, by the letter of the enforceable law, is to keep as much of the money you earned in your pocket.

Nevada: $1200 or more won on any type of slot machine, means a casino attendant haves you fill out a W2g, and you pay taxes on that win. If you had lost $1999 prior to the $1200 win, You still pay taxes on that $1200, even though you only actually won $1. You can write off the losses, but most people do not know this, or simply do not bother to do it.

Table Games are a different story. You can place $100 on the number 7. Have it hit, and get paid $3500. You only have to pay taxes on it, if you claim that income on your tax return, "ON YOUR OWN".

Internet Gambling: This is a big reason it is technically illegal. There is NO enforcement measure in place to make you pay taxes on any Win at all. Go look at the hundreds of pages of winning screen shots. A bunch of those are from players in America. Add up all those Wins. Hundreds of thousands of dollars, if not more. How much of that did, "WE", on our own, declair on our tax returns, and give to uncle sam?

Note: ANY Income, from Any Source, is required by you to be claimed on your tax return. Items sold at a yard sale, e bay, craigs list, helping your neighbor paint his house for $40, watching a friends pet while they are on vacation for $30, Affiliate Income, and on an on and on.

I am NOT saying, I am just saying, "Unless the IRS can, PROVE Income, you do not have to report it." It only becomes, "Tax Evasion", when it can be proven that you made the money and you are still not paying taxes on it.

 

[Jeannie]

So glad I'm Canadian..... Only taxed if said winnings sit in the bank and accrue interest.... only taxed on the interest earned in that case....

 

[chayton]

So glad I'm Canadian..... Only taxed if said winnings sit in the bank and accrue interest.... only taxed on the interest earned in that case....

yeah I hear THAT! Ray just won about 34K on a progressive win, and I told him if he had won that in the US he'd lose about 40% in taxes....that would suck.

 

[chayton]

So....let me get this straight. If you win less than the $1200 you're supposed to still claim it as income (on your own as an upstanding citizen), but if it's anything MORE than that then the people you won it from are required to do the form so you don't have the option to be an upstanding citizen because the IRS already knows you have it?

So when they say anything you win under $1200 is tax free, it's not REALLY tax free, it's only that the IRS didn't get the form so you don't really have to claim it?

I wondered about that when I was living there. If I only had to report anything over $600 (which is what it was in AZ when I lived there) what's to keep me from winning $600 every day and never claiming any of it? Except of course the whole sucky dry spells for slots But if I cashed out $500 from one machine and $300 from another and $450 from another and $500 from one more...not one of those wins is big enough to bring out the IRS form, but in total it would put me over. But what you're saying is that even though none of those wins on their own would be big enough to bring out the form, I'm still supposed to pay taxes on the entire $1750? Not that I'm allowed $600 tax free and only have to pay tax on the $1150 I'm over....?

ok so now my question is - online casinos. If you're a US citizen and you win $20K at an online casino, does the casino report to the IRS? Or do they only have to if they're an American company? Or do they even have to then?

 

[SlotKing]

Let me try to condense the issues at hand.

1. Any single-prize winnings of $1,200 or more in a B&M casino ($1,500 for Keno) are required to be reported to the IRS. A W2-G will be given to the bettor upon completion of identity verification. If this cannot be completed, 28% is required to be withheld immediately from the payment and then it may be given to the winner (this is called backup witholding). EDIT - Adding to this, a flat 25% of all single lump-sum payments of $5,000 or more is required to be withheld at the time of payment. This is not the case for Bingo or a few other games. This also applies, technically, to any prize where the proceeds are at least 300 times the amount of the wager (as little as $75 in some cases).

2. RTG gives its operators permission to essentially do what they want in regards to who they accept for players.

3. On the flip side, MGS is very restrictive on its operators and what they can do. The (perceived) consensus on this forum is that they are essentially trying to "flush out" the remaining US players by restricting the games they can play. MGS allowed licensees to continue catering to the US market after the initial passage of the UIGEA (except for, at the time, the 13 banned states). Players who were not in those states could continue playing at any MicroGaming casino. Then, they restricted new US-based signups. Then, they cut out progressives for US players. THEN, they cut out new games for the US players. See a pattern? The thought is (supposedly), that since they are one of the most reputable out there, they want to save face for the government should anything ever happen to them.

4. Playtech & CryptoLogic dropped the US entirely upon the passage of the UIGEA.

5. The definition of gambling (EDIT- online gambling) in the US has never been officially determined. However, 14 states specifically prohibit gaming online (Correct me if I am wrong, but I believe Michigan rescinded this in 2002).

6. The simple reason the feds don't want it? Less money in their pockets from the casinos, lotteries, horse racing parlors and any other "legal" gambling entity with deep enough lobbying pockets. Regardless of the amount of revenue it would raise (some $450 MILLION from some estimates), people will decry it because they think there is no way to prevent children from accessing it..

Hit the high points for ya

 

[SlotKing]

So....let me get this straight. If you win less than the $1200 you're supposed to still claim it as income (on your own as an upstanding citizen), but if it's anything MORE than that then the people you won it from are required to do the form so you don't have the option to be an upstanding citizen because the IRS already knows you have it?

Technically? Yes. The IRS requires you to report earnings on any and all gambling winnings. However, this is almost impossible to enforce, since you could win $50,000 on a 3-digit lottery drawing ($500 x 100 tickets), redeem each ticket at a different retailer (since they usually pay up to $600), and there would be no way for anyone to prove you won it... same goes for jackpots of $1199 and less on slots... since the machine pays it, no one can prove you actually won it. 99% of the time, you only report the winnings that require a W-2G to be filed. The other 1% is when you report everything you take in for the year, versus what you paid out - the case of professional gamblers and card players.

So when they say anything you win under $1200 is tax free, it's not REALLY tax free, it's only that the IRS didn't get the form so you don't really have to claim it?

Correct. It is not technically tax-free, it's just that it is under the required threshold to report, so it doesn't get reported to anyone.

I wondered about that when I was living there. If I only had to report anything over $600 (which is what it was in AZ when I lived there) what's to keep me from winning $600 every day and never claiming any of it? Except of course the whole sucky dry spells for slots But if I cashed out $500 from one machine and $300 from another and $450 from another and $500 from one more...not one of those wins is big enough to bring out the IRS form, but in total it would put me over. But what you're saying is that even though none of those wins on their own would be big enough to bring out the form, I'm still supposed to pay taxes on the entire $1750? Not that I'm allowed $600 tax free and only have to pay tax on the $1150 I'm over....?

The entire amount (minus your total wagers) would technically be reportable income.

ok so now my question is - online casinos. If you're a US citizen and you win $20K at an online casino, does the casino report to the IRS? Or do they only have to if they're an American company? Or do they even have to then?

99.9% of online casinos do not report winnings to taxing authorities, regardless of the country you are in. American-based casinos are required to report winnings to the IRS, but since no online casinos are based in the US, they will not report the information.

 

[love2winalot]

...............online casinos do not report the income......................

And thus, you see where we are today. "How dare you make money, using funds from America, sending them oversea's, and NOT pay Taxes on It".

Combine that, with the objection that stopped Las Vegas from even trying to enter the Online Gambling World, of, "How do we KNOW, the person at the keyboard, is of legal age to gamble"?

It all sounds so simple. Make Online Gambling Legal, and Tax it, and help the Economy. But, as you can see, it is far away from anything but SIMPLE.