US Casinos playing it smart with $1,199 Slots Jackpots

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If you’ve ever played the slots at US casinos, chances are you’ve come across a few machines that offer slots jackpots of $1,199. Seems an odd figure, right? But in reality, there’s a very tactical reason behind it.

It’s not because $1,199 looks so much more attractive. Sure, we’ve all become accustom to seeing price tags that end in the ever-popular “99”, such as a new car priced at $9,999. The reason is obvious – to the human eye, $9,999  simply looks more appealing than $10,000, plus the salesman can spout, “get a new car today for under 10 grand!”

Of course, when you add in tax, title and tags, the real price will be well over $10k, but they don’t have to advertise that part.

Conversely, it would make sense that a $1,200 slots jackpot would look more appealing than $1,199, but US casinos new exactly what they were doing when they chose the slightly lower payout mark. It has everything to do with paper work and the Internal Revenue Service (IRS).

According to the IRS, any time a gambler wins $1,200 or more, the casino is required to provide the player with a W-2G tax form before the cashier can hand over the winnings. The player must fill it out, and it must be promptly submitted to the IRS.

Don’t get me wrong, there’s no substantial monetary benefit to the player or casino for avoiding a W-2G. Players of US casinos are still required by law to report winnings earned from gambling, and pay the appropriate taxes on those winnings.

The casinos must also hand over a percentage of all slot machine revenue to their respective state government, regardless of whether it came from a big jackpot or a simple $1 winning combination. Thus paying $1,199 slots jackpots isn’t going to save them any cash in the long run.

The only benefit for US casinos is that they avoid filling out the additional paperwork, or frightening their patrons who are lucky enough to strike such a munificent win with IRS forms. After all, no one likes filling out forms, especially when they’re destined to arrive on the desk of an IRS agent.

I’ll Take $1,199, Keep the Change!

Now it may have crossed your mind, at this point, to request that a casino pay you less than the amount you actually won, if that amount happens to be slightly more than $1,199. Maybe a fortuitous spin of the reels pays out exactly $1,200, or a few dollars more.

Mark Pilarski, a syndicated gambling columnist who spent part of his career working the cashier cage of a casino, said that the accounting system in a gambling establishment is based on precision, right down to the penny. He further explained that colluding with players to avoid filing tax forms could cost a casino its license.

Essentially, he said don’t even bother asking, because you won’t get it.

Tax Avoidance Okay, Tax Evasion Not

Pilarski also pointed out the remarkable difference between ‘tax avoidance‘ and ‘tax evasion‘ – the latter being thoroughly illegal.

“Tax avoidance is the legal use of tax laws to reduce one’s tax burden,” said Pilarski. “In the eyes of the IRS, failure to report a $1,199 jackpot is escaping payment by illegal means, or better stated, tax evasion.”

So, while US casinos may avoid filing forms with the IRS by paying $1,199 slots jackpots, the players who win them are the ones assuming all the risk should they neglect to report those winnings on their annual tax filings.