Last time I was in Atlantic City, I noiced the cash machines where you can cash out the tickets. from slot machines would only cash out up to $3000, if your ticket was for more than that you had to. You've just had a lucky night. While you are still in the casino, you will need to provide identification and sign IRS tax forms in order to accept your prize. And then you get your money, right? Casinos have various ways of paying winners. Generally, if the winnings are $25,000 or less, winners can choose between cash or check. Yes, you can get cash from a credit card at casinos around the world. You do so at the casino cashier's cage or at an ATM kiosk. Of course, you'll pay some hefty fees: the cash-advance fee, a higher interest rate than on purchases (and it's collected from the nanosecond you get the cash, not tacked on at the beginning of your next billing cycle), and whatever the casino takes.
It's every gambler's dream to hit a huge payout and to bring home a pile of cash. But how much of that cash can you legally keep, and how much goes away in taxes?
Well, the rules differ from country to country.
For this article, we'll focus on the ins and outs of gambling taxes for UK players, and then for US players.
First, here's a quick summary of what we're going to talk about:
- UK gamblers playing at UK casinos do not have to declare or pay taxes on their winnings
- US casinos will ask for tax information & withdraw taxes if a player wins $600+ in one go
- US gamblers must declare all winnings during tax month under 'Misc. Income'
As we'll explain in this article, the specific details may differ from casino to casino. Let's take a closer look at how it all works.
Taxes for UK Gamblers: Land-based & Online Casinos
We'll keep it simple for the case of UK casinos and gamblers, because there's really not much to say.
You do not have to pay taxes on any of your winnings.
And this is true whether you're a professional gambler or a recreational one. In the UK, gambling winnings aren't viewed as income, so don't have to be declared as such.
So if you depend on gambling winnings as a form of income, or if you've just hit a one-off jackpot, you don't have to worry about calculating percentages to give away.
Cashing Out at Casinos
Of course, when it comes to cashing out, you'll be restricted by the casino's withdrawal limits. You can still cash out as much as you like – simply, you'll have to take it out in multiple installments if you have to.
As it's the casinos & bookmakers who get hit by taxes, you may find that UK casinos have slightly smaller withdrawal limits than US ones.
But we think it's worth the hassle of multiple withdrawals and eventually paying multiple withdrawal fees to the casino, if you get to keep it all afterward.
Taxes For US Gamblers: Land-based Casinos
Unfortunately for US gamblers, it's pretty much the opposite in their country. In the states where gambling is legal, gambling winnings are indeed treated as a form of income and are fully taxable.
If you're a US resident, taxable gambling income includes:
- Lotteries
- Raffles
- Horse races
- Casino winnings (slots & card/table games)
Like in many countries, there is a threshold beyond which your income becomes taxable. A few years ago the tax threshold for gambling winnings was $1,200 – now it's gone down to $600.
The question therefore changes to: 'When do I have to file my own taxes, and when does the casino do it for me?'
Triggering a Tax Form
Imagine that you're in a land-based casino, playing with a friend. You get lucky and win $600 with just one spin or hand, while your friend gets $600 of overall winnings.
In your case, during the casino's cashing-out process, you'll be asked to fill out a W-2G (or a '1042-S' for non-US residents). The casino will then withhold the tax themselves and you'll go home with your net winnings.
In your friend's case, he'll be able to go home with his gross $600 winnings. He'll have to file taxes on that income himself.
As you can see, there are rules for triggering a tax form at a casino. They are as follows:
- You can cash out $600 of overall winnings without paying taxes
- You must pay taxes straight away if you win $600+ on one spin or hand.
In any case, you'll have to pay taxes on those winnings. But the difference here is that you'll be able to cash out $600 without the casino removing the tax percentage for you.
Paying Taxes When Cashing Out
How Much Can You Cash Out At A Casino
Like we mentioned, when you get your money paid out to you at the land-based casino, the casino must issue you a W-2G.
If you got lucky and cashed out your overall winnings without getting taxed, don't get your hopes up. You're still going to have to report that income.
You'll do this by declaring your winnings on your 1040 form as 'Other Income'. This includes all winnings that didn't require reporting on the W-2G.
Paying Taxes as Non-US Residents
As seen on the IRS official website:
The US has a tax treaty with UK, so UK residents aren't subject to US income tax on gambling winnings.
This however doesn't mean that you're exempt from any taxes. At some casinos, you'll find that you'll simply have to pay a lower percentage.
In certain cases, the tax amount will still be withheld from your winnings. In order to get it released to you, make sure to arm yourself with your UK passport as well as an ITIN.
Taxes For US Gamblers: Online Casinos
Now, you might be thinking that you can get away with not paying taxes on money you've won online. You might try to stick it in an anonymous Bitcoin wallet and hope for the best.
But the IRS can very easily trace online winnings. In order to be operating legally, your online casino must conform to regulations.
This means that if the IRS comes knocking at their door, they'll be contractually obliged to offer up your records.
So, the same rule applies. When do you have to file your own taxes, and when does the online casino do it for you?
Triggering a Tax Form
For online cash games, players are often given their full gross payout. That means they then have to file their own taxes. It's during tournaments that casinos may withhold the percentage owed to the government.
Sometimes, online casinos will keep all winnings and players will get an email requesting them to give tax information. This happens when you:
- Win $600+ in a freeroll tournament
- Win $5,000+ in a regular tournament
The site will only release winnings once they receive information. You'll sometimes get the choice of letting the site keep the tax percentage, or getting all the winnings and having to file your taxes yourself.
Declaring Gambling Income
When it comes to declaring your own winnings and filing your own taxes, you may have to declare it differently according to your situation.
- Professional gamblers: pay income & self-employment taxes on their declared 'revenue'
- Recreational players: report winnings as 'Misc. Income'
Cashing Out Casino Winnings: How it Happens
Now that that's all out of the way, you may be wondering how the cash-out process actually works, and in what order things are done.
Let's take a closer look at what you can expect. This holds true for both US and UK casinos. First we'll look at how you cash out from a land-based casino, and then how you cash out from an online one.
Cashing Out From a Land-Based Casino
When you win a jackpot, you obviously won't be getting thousands of pounds' worth of notes chucked right into your lap.
High amounts of money call for heightened security.
There are several ways to cash out your winnings. It all depends on the casino you're playing at, and the number of winnings you've just won.
Cashing Out Small Amounts
Winnings from slot machines: you'll get a cash-out voucher from a TITO (ticket in, ticket out) machine. These can be redeemed from the casino's reception, or from an automated kiosk.
Winnings from table & card games: you'll take the chips you won to the casino's reception, where they'll be exchanged for cash.
Cashing Out Large Amounts
If you've hit a particularly big jackpot, you will be directed to a private room with guards for extra security.
In this room, a cashable voucher will be made for you to justify that you won the money. Then your money will be either hand paid in front of you, or put through a money counter.
Usually you can choose to get it in cash, or as a cheque. Sometimes cheques incur a delay, where you have to wait a few business days before you receive the cheque in the mail.
In some cases, the clerk will count out your bills in front of you so you can be sure that you get the full amount you won. They'll often get guards to escort you to your car.
Cashing Out From an Online Casino
This is pretty straightforward: you're the one who controls when you withdraw money from your online casino account, how much you withdraw, and where you withdraw it to.
According to the payment method you've chosen, the cash-out process may take anywhere between a few hours to a few weeks.
The times are usually as follows:
- E-wallets: 0-24
- Credit/debit cards: 2-4 days
- Bank transfers: 1-3 days
- Cheques: 2+ weeks (rarely offered)
To cash out, simply go into your user profile and navigate to the 'Withdraw' function. Irish casino online. You'll be prompted to enter an amount, and a payment method to withdraw it.
Once you hit withdraw, you'll fill out your banking tool's payment verification process, and that's it. Bear in mind that you can only withdraw from your regular casino account – not your bonus casino account.
Casinos in the United States which generate more than $1,000,000 in annual gaming revenues are required to report certain currency transactions to assist the Financial Crimes Enforcement Network (FinCEN) of the Internal Revenue Service (IRS) in uncovering money laundering activities and other financial crimes (including terrorist financing).
Although Title 31, also known as the Bank Secrecy Act, was originally focused on financial institutions, criminal use of banking services located within casinos created a need for additional regulations that were specific to casinos. Because large sums of currency are transacted through slot machines, gaming tables, automatic change machines, retail operations and the cage (banks), and with high frequency, the regulations were targeted at transactions in excess of $10,000. Casino regulation has been a topic of debate, prompting the United States Senate to have a hearing before the United States Congress in which Title 31 topics were discussed through testimony by industry experts such as Grant Eve, CPA and partner at Joseph Eve, Certified Public Accountants and Ernest Stevens Jr., Chairman of the National Indian Gaming Association.[1]
Transaction reporting[edit]
Currency transactions that occur within a single Gaming Day (the normal 24-hour period that any casino uses for accounting and business reporting), whether the currency is paid into the casino, paid out, or exchanged (in the case of foreign currency exchanges), in excess of $10,000 requires the completion of a Currency Transaction Report (CTR, FinCEN Form 112) and must contain enough information to accurately identify the individual(s) transacting the currency.
For example, if a man walks into a casino and stops at the blackjack tables and buys into the game for $12,000 (using cash), a CTR must be completed by the casino and filed with the IRS. In this example, currency is paid into the casino in the form of cash and happened within the unique 24-hour Gaming Day of the casino.
Here is an example of a cash out transaction: the established Gaming Day of a certain casino begins at 1:00am and ends at 12:59am. At 6:30am, a woman takes $6,400 in slot machine tickets to the main cage of the casino and requests payment in all $20 bills. Later that day, at around 7:10pm, the same woman approaches another cash cage on the opposite side of the casino and exchanges $4,000 in blackjack chips for cash. Because $10,400 was paid out in cash to a single individual in a single Gaming Day, a CTR must be filed by the casino to report the Cash Out transaction, because it is above the $10,000 threshold.
Because multiple transactions are aggregated for the purpose of Title 31 reporting, casinos create tracking programs to identify large transactions and automatically aggregate them in real time to ensure that they are compliant with the regulations.
Suspicious activity[edit]
Many criminals, such as those interested in tax evasion and money laundering, have researched the Title 31 requirements and have created a number of strategies to avoid detection of their activities by circumventing the reporting requirements. When these activities are discovered, casino staff are required to file a Suspicious Activity Report (SAR, FinCEN Form 114) to report the suspicious activities. Because there are many types of suspicious activities, it is required that casino personnel receive Title 31 training to avoid penalty and remain compliant.
Two of the most popular strategies for circumventing CTR reporting are structuring and minimal gaming.
Structuring[edit]
Because the $10,000 per gaming day CTR threshold is part of the Bank Secrecy Act, a criminal may seek to evade being recorded on a CTR by breaking a transaction over $10,000 into multiple smaller transactions, which is known as structuring. Single and multiple currency transactions in excess of $10,000 (in a single Gaming Day) are reported to the IRS. To track multiple transactions, many casinos record transactions as low as $3,000 (and lower) to ensure that they remain compliant with the CTR requirements. Again, criminals (including those interested in tax evasion) may break up their transactions into several, smaller transactions to avoid detection.
How Much Can You Cash Out At A Casino Without Taxes
For example, conducting three transactions of $4,000 is more than $10,000, which is the threshold of reporting a CTR. If the casinos did not track multiple transactions, the individual might be able to circumvent the reporting of their transactions. However, because most casinos track transactions of $4,000 (and lower), structuring this $12,000 transaction into three, smaller transactions would not prevent a CTR from being filed. And, while it may be possible to break up $12,000 into 20 individual transactions of $600 each, casino personnel also maintains awareness of this tactic and would likely detect the numerous trips to the cage to perform similar transactions.
Minimal gaming[edit]
Another type of suspicious activity is related to money laundering, where a casino patron may put large amounts of money in play, but gambles very little before cashing out. Mad hatter game.
For example, a bank robber steals $50,000 from a large bank. Most banks mark cash with exploding dye or sequential numbering of the large bills. To avoid being apprehended, the bank robber needs to exchange the stolen money for money that cannot be traced back to the robbery. In this situation, a bank robber may put $1,000 in $20 bills into a slot machine and spin twice before cashing out. Whether the slot machine pays the bank robber in coins or a slot ticket is irrelevant because the traceable money is in the machine and the bank robber will effectively receive 'clean' or 'laundered' money.
Both of these situations are suspicious, as defined by Title 31 regulations, and require a completed SAR by the casino, within a specified period of time.
Involvement of Agents[edit]
Two or more individuals handling the same currency bankroll are commonly referred to as 'agents' by the casino. An example of this would be individuals purchasing chips and dividing them amongst themselves. Agents cashing out chips or making currency transactions on behalf of one another are also popular examples of agent activity. Since agents handle the same bankroll, they essentially become entities and their transactions must be recorded together. All parties involved in agent activity must submit proper identification and complete the required IRS forms when their COMBINED transactions reach over $10,000 in a gaming day. While agent activity can sometimes occur with legitimate transactions (e.g. Two up casino login. a husband cashing out his wife's slot vouchers so she can continue to play), agent activity is highly suspicious because it allows individuals to structure their transactions below the $10,000 to avoid being documented to the IRS.
Involvement of casino staff[edit]
It is illegal for an employee of the casino to assist a casino patron in circumventing the reporting requirements of Title 31. Such circumvention can include notifying patrons that they are nearing reporting thresholds, disclosing the time that the Gaming Day ends, and neglecting to report suspicious activity. A casino employee that has been found to have circumvented Title 31 can be assessed civil and criminal fines, in addition to incarceration.
References[edit]
- ^United States Senate Committee on Indian Affairs (November 17, 2011). 'The Future of Internet Gaming: What's at stake for tribes?'. One Hundred Twelfth Congress First Session.
