Gaming industry leaders gathered at Global Gaming Expo in Las Vegas last week and discussed important topics impacting key stakeholders around the world. Even though the changes to gambling taxes took place months ago, they were still top of mind for many industry leaders.
Tax reporting changes for slot wins were discussed, along with the One Big Beautiful Bill Act (OBBBA), a bill that impacts how deductions for gambling losses are allocated.
The tax provision came up during G2E’s Inside the C-Suite: Gaming’s Future in Focus on Stage keynote session. The session included American Gaming Association President Bill Miller and MGM Resorts International CEO Bill Hornbuckle.
Slot win threshold increase considered a win
Miller noted a recent tax change to slot wins that favors casino visitors. The budget bill increased the minimum threshold on slot jackpots from $1,200 to $2,000, something the industry has been fighting for for years.
“It’s not the $5,000 that we wanted but we are getting there and we take the win and we will continue to work to get to that $5,000 number,” said Miller.
Starting in 2027, the slot winnings minimum threshold will also be indexed to inflation.
AGA still working to change gaming tax loss deduction
Miller also noted an unfortunate side effect of the OBBBA, the measure that mandates that only 90% of a gambler’s total wagering losses in a taxable year should be allowed as a deduction. U.S. gamblers are currently allowed to deduct 100% of losses if the losses don’t surpass their winnings for a given tax year.
The OBBBA’s requirements stirred controversy across the industry as the act makes it possible for gamblers to be taxed on more than their net winnings during a taxable year. The act could hurt the pockets of gamblers, but it can generate incremental additional tax revenue.
“We’ve joined business leaders to preserve a low corporate tax structure and to implement provisions that will encourage innovation and reinvestment in gaming technology, continued Miller, “And of course, with every big piece of legislation, there’s always some pluses and minuses.”
According to projections from the Joint Committee on Taxation, the OBBBA is estimated to generate over $1 billion in additional revenue from gamblers over an eight-year period.
“In the big scheme, money is going into some of the right places,” said Hornbuckle.
The OBBBA’s impact on industry employees
The OBBBA may harm gamblers, but it provides opportunities for workers in the industry.
“The hospitality industry, which we’re proud to be a part of, has a lot to lose,” added Miller.
The hospitality industry can benefit from a new policy that derives from the OBBBA. The policy, proposed by the IRS, allows casino workers to deduct taxes for tips received through “tangible or intangible tokens that are readily exchangeable for a fixed amount in cash.”
The tangible or intangible tokens include casino chips.
Under the policy, employees are allowed to deduct up to $25,000 in tips from their taxable income in a given year. The No Tax on Tips policy applies to casino chips but also allows employees who regularly receive tips to deduct taxes for tips received in cash, by check, gift card, electronic payment and debit or credit cards. Employees who can benefit from the provision include bartenders, servers, booth cashiers, and gambling dealers.
The impact of prediction markets and offshore sites
Miller also pointed to how emerging gaming verticals are impacting potential tax revenue.
“Sports event contracts, skill games, and offshore sportsbooks share one thing in common,” said Miller. “They’re undermining America’s successful approach to games. They pose a clear and present danger to state budgets and tribal finances.”
Event contracts and offshore sportsbooks don’t adhere to the same tax requirements as licensed operators across the country, preventing the ability to generate state tax revenue.
The OBBBA and recent tax changes in the U.S. will continue to stir debate. The OBBBA is continuing to receive pushback from groups, including American Bettor’s Voice (ABV), an organization that represents bettors and advocates for fair regulatory standards.
ABV board member Adam Robinson published a paper detailing how the OBBBA is a threat to regulated sports betting and the potential consequences of the policy on bettors.
Under the OBBBA, Robinson projects $18 billion in annual handle losses for operators.
