Las Vegas Strip, Atlantic City, cruise gamblers get IRS gift

Every gambler knows the pain that comes with certain wins.

You finally hit the bonus on your slot machine, and the win total comes in at $1,200 or higher. That means your machine will lock up, and a casino staff member has to come over to you to collect your license.

The problem is that casinos have been notoriously bad at paying attention to people who hit a bonus that requires what's known as a handpay. That's a payday where a single play on a slot machine (or video poker machine) exceeds the $1,199.99 amount that requires the casino to fill out and IRS Form W-2G for slot machine, video poker and Bingo payouts of $2,000 more.

I've hit that number of machines in Las Vegas when traveling alone. If that happens, and no staff member comes over, you have quandry because you don't want to leave a slot machine full of your money.

You can try to flag someone down, ask a bar server to do the same, or hope that a kind stranger helps and gets someone for you (that actually happens more often than not). Once someone shows up, they need your license and your Social Security number.

After what's hopefully a few minutes, they return with a form for you to fill out, then they leave, eventually bringing you your W2-G and your winnings. This draws a lot of attention to you, which may not be the safest thing at some Las Vegas Strip casinos, and it's often time-consuming.

Now, after much lobbying from Nevada's congressional delegation, the Internal Revenue Service (IRS) confirms that it's raising the limit for requiring a W-2G to $2,000.

IRS shares new limits

The IRS confirmed the information found in a draft form of the new W2-G on its website.

"Increase in threshold for requiring filing of certain information returns and backup withholding. For calendar years after 2025, the minimum threshold amount for reporting certain payments and backup withholding on certain information returns, including the Form W-2G, will be adjusted yearly for inflation. The minimum threshold amount for payments made in calendar year 2026 is $2,000," it posted.

The agency then spelled out which forms of gambling require the new W2-G.

"A payee of gambling winnings meeting the reporting thresholds for bingo, keno, and slot machines, and a payee of gambling winnings meeting the withholding thresholds from horse racing, dog racing, jai alai, sweepstakes, wagering pools, lotteries, sports wagering, and certain other wagering transactions, but not from a state-conducted lottery, must present two forms of identification, one of which must include the payee’s photo
identification," the IRS shared.

All land-based U.S. casinos just abide by these rules. Most cruise ships sailing from the U.S. use the same policies, including Royal Caribbean, Celebrity Cruises, Carnival Cruise Line, Norwegian Cruises, and Virgin Voyages. MSC Cruises chooses not to abide by IRS rules, and technically that's legal,l although American citizens are, in theory still obligated to report gambling winnings as income.

"The statutory change does not apply retroactively and will not affect jackpots paid in 2025," the Las Vegas Review-Journal, which also confirmed the new 2026 limit directly with the IRS, reported.

Why the IRS casino limit matters

Players don't like having to wait for the tax form, and casinos don't like having to spend manpower issuing them.

"The draft also establishes that the reporting threshold will increase annually to reflect inflation, introducing an automatic adjustment mechanism that had not existed before," according to Casino Directory.

The casino appreciates the change.

“Raising the slot tax reporting threshold to $2,000 and indexing it to inflation is a long-overdue modernisation that reduces regulatory burdens and improves the customer experience," American Gaming Association Senior Vice President of Government Relations Chris Cylke shared in a statement.

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Chief Deputy Whip Guy Reschenthaler (R-PA) and Representative Dina Titus (D-NV), co-chairs of the bipartisan Congressional Gaming Caucus, have actually enbcouraged the IRS to do more.

“We urge you to follow the IRSAC’s recommendation and exercise your authority to raise the threshold for slot machine jackpot winnings to $5,000 and to consider periodic increases to the threshold based on inflation. Taking this action will align with the IRS initiative to strategically use data to improve tax administration and modernize tax reporting for our constituents,” they shared in a letter to the tax agency.

Technically, all casino winnings must be reported to the IRS

"All gambling winnings are considered taxable income under U.S. federal law, requiring mandatory reporting on your annual tax return. This requirement applies universally to proceeds from lotteries, casinos, sports betting, and even casual wagers. The Internal Revenue Service (IRS) mandates that every dollar won must be accounted for, regardless of the source or the amount," LegalClarity reported.

Certified Public Accountants Dannible and McKee LLP acknowledge that not all taxpayers are fully honest about their gambling winnings.

"Whether you’re a casual or professional gambler, your winnings are taxable. However, the Treasury Inspector General for Tax Administration reports that gambling income is vastly underreported. Failing to report winnings accurately can lead to back taxes, interest and penalties," they shared on their website.

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The higher threshold likely means more wins might not get reported, but it does make things easier for players and casinos.

"Raising the W-2G threshold to $2,000 brings information reporting into the 21st century," a senior tax attorney who advises multiple casino operators told Casino Reviews. "It will reduce administrative burdens on properties and decrease the frequency of intrusive reporting conversations with recreational players who hit relatively common payouts on modern machines."

History of the $1,200 Casino Tax‑Report Threshold

• Introduced in 1977: The IRS first required casinos to issue Form W‑2G (“Certain Gambling Winnings”) for slot machine and bingo jackpots of $1,200 or more starting in June 1977. This $1,200 figure has remained the reporting threshold for decades, according to the Las Vegas Advisor.
• Why $1,200? : When established, $1,200 was a significant jackpot and meant to capture large slot wins for federal income tax reporting. Over time, inflation has eroded its relative value, meaning many more jackpots today trigger reporting than originally intended, reported Action Network.
• Regulatory rule: The detailed reporting requirements come from 26 CFR § 1.6041‑10, which defines when Form W‑2G must be filed for gambling winnings like slot machines and keno, added the Legal Information Institute.

How the IRS W2-G worked through 2025

• Taxable income: All gambling winnings reported on W‑2G are taxable and must be reported on your federal return, even if losses offset them, according to the Internal Revenue Service.
• W‑2G reporting thresholds: Under long‑standing IRS rules, casinos issue Form W‑2G when:
  Slot or bingo winnings are $1,200 or more, Keno winnings (net of wager) are $1,500 or more, Poker and certain other winnings exceed thresholds (e.g., $5,000). Source: IRS

In their letter to the IRS, Reschenthaler and Titus explained why they wanted a higher limit.

"The antiquated threshold, which has been static since 1977, has led to a significant increase in the number of W-2G forms filed each year, with more than 21.2 million of these forms filed in 2022. Due to inflation, this leads to increasing compliance burdens on taxpayers and significant operational costs for casinos that are providing family-sustaining jobs in our states," they wrote.

The Congressional Gaming Caucus comprises a broad representation of Members of Congress from across the country. It serves as a platform to discuss federal policy issues related to the U.S. gaming industry and educate congressional colleagues on related regulatory and legislative matters.

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