How Do Casinos Pay Out Large Sums Of Money?
Plenty of casino players pick up prizes on their favorite slots or other casino games. Most of those are going to be small, but occasionally, someone manages to buck the usual trend and pick up a huge win.
But what happens then? How is that prize paid out and how long does it take to receive it? We decided to check out the details.
Check the rules at each individual casino you play at
This is the best way to get started at a casino, as you'll then know how things work if you do manage to scoop a major prize. It would be horrible to be fortunate while playing a casino game and then realize the rules at that casino make it hard to get at your money.
Expect to lose some of your winnings to taxes
If you scoop a big prize on a slot machine or poker tournament, you're going to pay federal taxes on it. You'll need to pay some to the IRS too. The best bet is to read up about gambling winnings for your state, so you know what's expected of you.
There are limits on winnings in certain games, so if you win anything worth that amount or more on a specific game, you'll need to report those when you file your next tax return. For example, if you snag $1,200 or more while playing a slot game, you'll need to file the form W2-G. The same form applies to poker winnings while participating in a tournament, although in that case, the minimum applicable is $5,000 in winnings.
You'll see that regardless of which casino you play at, you'll receive less than your winning amount. That's because the casino will retain the applicable amount in taxes first. This could be up to 25% depending on which state you're in.
Is there any way you can win at casinos without paying tax?
Yes - you have a limit of $600 in place to cover multiple wins at a casino prior to tax requirements kicking in. However, if you won $600 on a single spin of the reels, or indeed on a hand of cards, you'd be required to pay taxes on it.
The rules can vary further depending on whether you're playing in a casino tournament or whether you're playing a regular game and you manage to get a prize that way. In some cases, you might be able to opt to receive all your winnings, and then you can file your own taxes. In other cases, you may not be able to get to your winnings until you supply the casino with your relevant tax details. They'll then deduct the tax owing and forward the rest.
Would you like cash or check?
You might be asked this for prizes worth up to around $25,000 at a casino. A check is safer, of course. We doubt you'd feel secure wandering around with $25,000 in your back pocket!
Bigger prizes might have the option of receiving installments rather than asking for the entire amount in one hit. Again, the rules in place at the casino you're playing at should make this clear. While few players will ever bump up against a situation that demands they think about these rules, it's still good to know about them in advance. Remember that receiving a lump sum prize from a casino means you'll need to pay taxes on it as applicable in your area.
What about playing a real slot game rather than one at an online casino?
This is different, of course, as you'll be at an actual slot machine. The rules for large payouts should appear on each slot. This means you'll know before you even play a dime on the machine whether you'd be paid in a lump sum or in installments. If you get a choice of what you'd like to do, you may wish to get an appointment with a financial planner or similar professional to work out what would be best in your situation (and state).
Is it possible for someone else to claim my prize for me from a casino?
It's difficult to do this and the only way it might be possible is for a power of attorney agreement to be in place. This means a 1099 form is required before the casino can send the winnings.
Do you pay more tax on bigger prizes than smaller ones?
The actual amount you pay will be more, yes, as the prize is bigger. However, it will remain at the same percentage. For example, if you win $8,000, you'll pay $2,000 in taxes as that works out at 25%. If you win $1 million, you'd pay a lot more in taxes - $250,000 - but you'd still be at the 25% level. This part never changes. The good bit is that the casino will withhold the sum for you, sending you a W2-G form to send to the government to confirm what you've won.
What would happen if I didn't report what I've won at gambling?
You could end up being audited because the casino would report your winnings, so they'd check whether you had too. Casual gamblers can list their winnings on their 1040 form. Be careful of losses and expenses though. You cannot claim expenses if you're a casual gambler. Moreover, you cannot report losses that are far greater than your winnings at gambling if you're a casual gambler, as this is going to look shady. If you win $4,000 and lose $3,000, you can report $1,000 as a profit. However, you cannot claim any more than $4,000 in losses if you've won that amount.
Do casinos always report a player's winnings to the IRS?
They'll do this if the required threshold is met for the game or tournament in that situation. For example, slot prizes are reported once they go beyond $1,200. The same applies with bingo. Winnings over $5,000 for a poker tournament must also be reported. If someone wins on the horses, winnings of over $600 are reportable, as are winnings of 300 times or more the value of the wager.
Can you be banned from a casino if you're always winning?
Absolutely, and you can't blame the casino for doing this. People might have a winning streak, but you wouldn't expect this to last. If someone starts winning all the time, you can bet the casino will be watching them closely. They know the various ways and methods people sometimes use to cheat the casino - counting cards is a common one, especially in blackjack. If the casino decides to ban you, there's not much you can do about it.
How can I make sure I win when betting at a casino?
There are no guarantees, of course. Casino gambling is based on chance. There might be a little skill involved in some instances, but for the most part, it's all about chance. If you manage to get some lucky bets, quit there and take the prize. If you try and gamble it to get a bigger reward, that's where you're most likely to come unstuck. And it's a smart idea to have a loss limit in mind before you do anything else.
What's the ideal amount of money to bring to a casino?
Whatever you decide to bring, make sure it's something you can afford to lose before you walk away. Smaller amounts won't go as far, but you need to make sure you can comfortably lose your budget before deciding on an amount to play with. You should also check which games would suit your budget before you start playing.
Are my winnings treated as income?
Yes, they're like anything else you earn from other sources. You won't be taxed until you receive your winnings though, in the case of installments. You'll pay tax on each portion you receive.
What happens if I win a casino jackpot?
You can start by celebrating! As explained above, you can find out how payment will be made - whether that's by cash or check or in installments. A lot depends on the amount won, which could be anything from $25k upwards depending on the game. Progressive jackpots can be worth millions, and in that case, you'll need to find out whether you can claim the whole lot in one hit or whether installments are available, if you would prefer those.