AGA Formally Denounces Slot Winnings Taxation Proposals

Posted on: June 3, 2015, 12:25h. 

Last updated on: January 12, 2023, 11:39h.

Geoff Freeman, American Gambling Association President
AGA President Geoff Freeman is aghast at the IRS’ proposal to electronically track players’ winnings through their customer loyalty cards for tax purposes. (Image:

The American Gaming Association (AGA) has hit out against IRS proposals to lower the tax reporting threshold for slot winnings from $1,200 to $600.

The industry body complained that the new proposals would be detrimental to customer experience, increase paper work and disrupt the casino floor, as well as requiring expensive upgrades to casino back-end systems.

The AGA, which represents operators and gaming suppliers that collectively support 1.7 million US jobs across 40 states, made its feelings clear in the form of a 15-page formal comment submitted to the IRS this week.

This came on the back of a letter sent by 17 bi-partisan members of Congress to IRS Commissioner John Koskinen stating that increased labor costs and lost business revenue resulting from the proposal would be “detrimental to local, state and national economies that depend on those revenue to support critical services.”

Serious Harm to Business

AGA President Geoff Freeman was particularly critical of the IRS suggestion that the rule could be enforced through the electronic tracking of players’ gambling habits through their customer loyalty cards.

“The gaming industry is aware of no other industry in the country for which the IRS has issued regulations requiring the industry to deploy its customer loyalty program for federal tax collection purposes,” Freeman complained.

Freeman said that the labor cost and lost business revenue that comes from the reporting of slot machine winnings is already burdensome, as the machines “lock up” and are temporarily taken out of service after a jackpot of $1,200 is hit so that it can be reported to the IRS.

“AGA is aware of no other US industry that must take its assets out of the production of revenue to fulfill its tax reporting responsibilities,” he said. “The proposed slot reporting guidance would substantially magnify that burden on the casino to the point of serious harm to its business by mandating the use of a marketing tool for tax information reporting purposes.”

Disruption to Backend

Furthermore, the reprogramming of the casino’s back end systems, which would be necessary for them to comply with the proposed regulations, would be disruptive and costly, Freeman said, especially for those casinos that operate in multiple markets.

“AGA casino members have expressed concern that in order for their back-end systems to become able to compile, store, and index for retrieval a sizable number of daily win/loss statements, costly investment would be necessary in programming and in a substantial increase in the current storage and processing power of these systems. This costly investment in the necessary back-end systems changes would be magnified for those casinos that operate in multiple markets.”

The AGA recently launched an online petition that garnered over 10,000 signatures opposing the proposals. These signatures were from casino employees and customers alike, from across all 50 states, said Freeman.

A public hearing on the proposals will be held in Washington DC on June 17.