Canadians Gambling in the USA

       The USA taxes all gambling winnings won in this country, both the winnings of its citizens and the winnings of the foreigners who gamble here, like our friendly Canadian neighbors who cross the border to play in our casinos.  US casinos withhold tax from all foreigners gambling in this country when paying out hand pays, the winnings they have to report on form W2G. And they withhold a lot! They withhold 30% of any reportable jackpot wins - the ones over $1,200 - regardless of the foreign gamblers’ home country’s rules or rates for taxing gambling winnings. Why do they do this and why do they withhold so much? 

       Well, for one thing, casinos are required by law to withhold tax in certain instances. They must withhold 28% when a US jackpot winner doesn’t provide and certify his Social Security number on a W9 form. This is called backup withholding. Threatening to backup withhold 28% of a winner’s jackpot is a good way for the casino to encourage the player to provide his SSN for the W2G form. The withholding is shown in box 4 of the W2G the casino gives the US resident, who will claim it on line 64 of his 1040 when he files. Over-withholding from US citizens by the casino is refunded when they file Form 1040 just like overwithholding from an employer is. 

      Casinos are also required to withhold 30% of reportable winnings from foreigners — slot winnings over $1,200 currently. The foreign gambler can file a non-resident tax return (Form 1040 NR) for a refund from the United States if too much tax was withheld here from his winnings. If he doesn’t bother filing that claim within 3 years, our government still got its share of his jackpot.

       There are a lot of companies who will file form 1040 NR for Canadians who had tax withheld in the USA. Their ads pop up on my computer all the time. You can see the 1040 NR form and read its instructions on the internet yourself at IRS.gov. The form seems fairly complicated. The income of the Canadian citizen earned in the United States falls into one of two categories - effectively connected income (such as income from a business located in the US) or non-effectively connected income (which includes gambling winnings.) The instructions direct residents of Canada to use lines 10a — 10c of the Schedule NEC to report their gambling wins and losses. Residents of other countries use line 11. Here’s what the instructions from last year’s 1040 NR Schedule NEC say. 

       “If you are a resident of Canada who is not engaged in the trade or business of gambling, enter all gambling winnings on line 10a. Include proceeds from lotteries and raffles. Do not include winnings from blackjack, baccarat, craps, roulette, or big-6 wheel. You can deduct your US source gambling losses to the extent of your US source gambling winnings. Enter your gambling losses on line 10b. Enter your net gambling income on line 10c, column (c). If line 10b is more than line 10a, enter 0 on line 10c.  A net loss from gambling activities is not deductible.”

       That part doesn’t seem too bad. Canadians report their US wins, they subtract their US losses for which they have records. (Remember to keep a diary!) The difference (if any) is the reportable taxable income. Unfortunately Schedule NEC is not all you have to complete. You also have to file it with Form 1040 NR, and that tax return seems to be a rather  complicated one.  People will want to charge you money to file it for you, probably a lot of money.

       Bottom line is, if the Canadian gambler files Form 1040 NR, he will probably have a refund of at least part (and maybe all) of what was withheld by the casino — unless he has other income connected with the USA to report on his US non-resident tax return. But because Form 1040 NR is a very specialized tax return to file, his tax preparer will take a fairly large part of his refund to file it for him. If you are a Canadian paying someone to do this form for you, make sure you use a preparer  who has had experience with the 1040 NR. Keep any paperwork the casino gave you showing the amount the casino withheld to give him.

       Or, if you prefer, you can use one of the companies on the web that make a living recovering such withholding instead.

       Or, if you are really ambitious and really into taxes and accounting, you can order the forms and instructions for Form 1040 NR from irs.gov or print them off the internet and fill them out yourself. You will probably also need Form W-7 to apply for an ITIN - Individual Taxpayer Identification Number - if you don’t already have one. An ITIN is an individual taxpayer identification number used for filing tax returns in the US by people who are not eligible for social security numbers.

       Or you can avoid max bets and hope your wins are small enough that you don’t get any hand pays requiring tax to be withheld. 

      But maybe your best option is to just gamble in Canada where they don’t tax their residents’ gambling winnings!  That’s what I would do.

Gambling in Canadian Casinos

       Nobody likes to pay taxes, but we all understand why we have to do it. How would our federal and state and local governments all pay their bills if we didn’t all chip in our fair share? Who’s going to finance these roads and schools and armies and services deemed necessary for our well-being if we don’t all pay our part?

       OK, we’re all willing to pay our fair share of taxes if everyone else does too. But we wish our share didn’t have to be quite so much. And we slot and table players wish our taxable income didn’t have to include our gambling winnings at all. It doesn’t seem fair that we have to pay tax on money we won today if we give it all back when we play tomorrow. 

       Well, guess what - if we were residents of Canada, we wouldn’t have to pay tax on our gambling wins. Not on money won in Canada anyway. For recreational gamblers - which is what we all are - gambling winnings are tax free. Yes, you read that correctly. Recreational gambling winnings in Canada are tax free! 

       …for Canadian citizens.

       Under Canada’s Income Tax Act, “windfalls” such as lotteries and sweepstakes are not taxable. Prescribed prizes awarded for meritorious achievement in the arts, sciences, or public service are also exempt from taxation. Canadian taxable income encompasses total income from just four sources: office, employment, business, and property. So, unless the gambling activity is in fact a business, our sensible neighbors to the north do not tax their resident’s gambling winnings. They recognize that almost nobody wins if they gamble long enough, and so they don’t require reporting either gambling wins or gambling losses at tax time. How lucky can our Canadian neighbors be!

       You might wonder what happens when US residents cross the border and gamble in Canada. What if a US citizen gets lucky and wins at Windsor - will his gambling winnings be exempt from tax  too? We just said Canada does not tax recreational gambling winnings.

       Sorry. The answer is no. (You thought it would be, didn’t you?) The USA taxes all income you have no matter what the source, unless specifically excluded by law. The IRS doesn’t care whether you won your windfall in the United States or in Canada or on a boat in the middle of the Pacific Ocean. They don’t care if you won the money playing slots in a Native American casino or shooting craps in some back alley. They don’t care if the game was legal or was totally against the law. The IRS doesn’t care where or how you won the money. They just want you to include it on your 1040 Form and pay tax on it. Log it in your gambling diary. Include it on line 21 of your 1040 with your other gambling winnings. It’s all taxable income in the USA. Period.

       It’s a little like winning a jackpot in Nevada, which does not have a state income tax, when you are a resident of California which does have a state tax. A very large one. You pay tax to California for your Nevada win. You pay tax to the USA for your Canadian one.

       Fair? Unfair? Who’s to judge. Well, one thing’s for sure — it’s good for Canadians and it’s good for the IRS. It just might not be good for you and me.  Coming soon, Canadians winning in the USA.

Finders Keepers? Not in a Casino!

       Have you ever sat down in an empty seat to play your favorite slot and found credits left in the machine by the previous gambler? What did you do? Did you change machines? Did you cash out the abandoned credits and turn the ticket in to the casino cage or to security? Or did you decide it was your lucky day and play that money together with your own? If you chose option three, you might have found yourself in for a nasty surprise.

       Money left in a machine belongs to the casino, and players other than the one who left it there cannot claim it. Nobody ever tells you this until you have committed the unpardonable sin and found yourself being treated like a criminal for playing out a few pennies that don’t belong to you.

       Most people are honest. If you found a purse or billfold on the floor by your machine, you wouldn’t hesitate to turn it over to security. Why? Because there’s probably a driver’s license or other identification inside that will tell the casino who the property belongs to, and they can return it to the owner. 

       If there was a player’s card inserted in the slot machine with the abandoned credits, you wouldn’t use that money or play that machine either. You’d understand that the owner was still playing the machine and had probably just needed a bathroom break and would be returning soon to continue his play. Players often leave their cards and a small amount of credits in their machines when they leave so no one else will play their machine while they’re gone. They often leave something like an ash tray on the chair also. You wouldn’t touch that money.

       Twenty cents in a machine with a minimum bet of a quarter is not so clear. Is the player coming back, or did he not want to contend with payment vouchers for such minimal amounts? I’m afraid when I first started playing the slots over a decade ago I would have seen nothing wrong with playing those coins. Finders keepers is what I would have thought, and no one told me anything different. Now I know better. I wouldn’t dream of playing that twenty cents today knowing what I know now.

       Does the prohibition against playing found money apply only to money in the machines? What about a five dollar bill found on the floor? Does the old “finders keepers, losers weepers” rule apply when the money is not in a machine? Or does that belong to the casino too? The safest option is to turn found money over to the casino whatever the amount wherever you find it and hope they say you can have it if no one else claims it that day. But don’t hold your breath. 

       I don’t remember anyone ever telling me, when I took up slot play years ago, what the rules were about playing found money. I don’t think it would have ever crossed my mind that found money belonged to the casino. I know better today. Today I would not play found credits today under any circumstances, and you shouldn’t either. Abandoned credits belong to the casino if the actual owner doesn’t claim them. Take them and you’ll be labeled a thief or worse.

       Everybody who writes about gaming says you cannot play this money. I have been searching for something written by a gaming commission or legal source that tells us the same thing. There is so much information available on the internet that it is hard to find what you are looking for sometimes.

       I did find a citation in the California Penal Code: Section 337u(c). It says there that you are breaking the law if you claim, collect, or take (or attempt to claim, collect or take) anything of value in or from a gambling game, with intent to defraud, without having made a wager contingent on the game - or if you claim, collect, or take an amount greater than the amount actually won. Penal Code section 337(z)(a) says the penalty can be imprisonment in a county jail for up to a year or a fine of not more than $5,000 for a first offense or both. 

       Here’s another example. Colorado Gaming Regulations read: If an award is abandoned in the tray or on the credit meter of the slot machine, the award becomes null and void and the property of the casino unless the person who originally won the award makes a claim for the award. Claiming credits in Colorado is a class one misdemeanor for which you can be arrested.

       I’m sure there are similar written prohibitions for other states on the web too — if you have the time to look for them. It’s easier to just check with the employees at the casino where you plan to play about what you should do in these circumstances, or easier still, to not play with found money.

       There are a lot of stories on the internet about the problems people have had playing with or cashing out abandoned money. I was sent a narrative on Facebook just last week written by a woman whose 73 year old father cashed out (but did not play) abandoned credits at one of our Native American casinos. He kept the credits separate from his own money while looking for the true owner to give them to, but didn’t think to hand them over to security and let them search for the owner. She felt the casino should have been more understanding of an older player’s not knowing what to do in this situation. He wasn’t fined and wasn’t sent to jail, but he was embarrassed and made to feel like a thief. I don’t know if she realized things could have been a whole lot worse for him.

       If you want an article to read, HERE'S ONE. It was written by John Robison in Casino City Times this January.   

       Perhaps the casinos should publish a brochure explaining the rules for practices such as seat switching, pushing the button on another player’s machine, and playing abandoned money. The brochure could include a little helpful tax information too about where to report and the rules against netting wins and losses at tax time. They could hand these flyers out to their new gamers when they join their player’s club. Some of us veteran gamers could probably learn a thing or two also. Maybe it’s time to think about revising my gaming guide to include some of these issues. 

Gambling Addiction - Self Banning

       Do you often gamble until your last dollar is gone? Do you ever borrow money or hit the ATM to finance your gambling? After a win, do you have a strong urge to return and win more? After losing, do you feel you must come back as soon as possible and win back your loses? We all do this now and then, but if you find yourself doing it most of the time, you may have a problem - a serious one. You may be addicted to gambling. 

       For most of us, casino gaming is something we can take or leave. Sure it’s fun, but if we find ourselves in a pinch because of unexpected expenses, we can easily go on hiatus for a month or two until we’ve got our finances under control again. We all know we should never gamble money we can’t afford to lose. Gambling has to come out of our entertainment budget - not out of money we need for household expenses, or the kids’ education, or our retirement savings.  If there’s some left over after all the bills are paid, that’s great. We can have a little fun with the surplus. But we should never, never risk more than we can afford to lose. 

       We should also never gamble when we are drunk, drugged, depressed, or desperate. We’ll likely gamble more recklessly and dig our hole even deeper. We’ll make mistakes when we are not emotionally and mentally in control, and this will cause us to lose even more and feel even more hopeless.

       Some people don’t have the self-control to stay away from the slots or the tables. Winning makes them want to play longer and win more. Losing makes them desperate to gamble on and make even bigger bets to recoup their losses. Gambling is not a social game for these people. It’s an addiction, no different than an addiction to alcohol, or drugs, or sugar, or anything else we think we can’t live without. If you have a problem, you know it. You know all the signs. You just don’t know what to do about it.

       Sometimes compulsive gamblers without the self-control to stay away find the only solution to overcoming their illness is to ban themselves from the casinos altogether. California and many other states have programs where a problem gambler can self-ban himself from one or more problem venues for one year or for five years or for a lifetime.

       Casino staff will help. They will take the gambler’s picture and a copy of his driver’s license and they'll have him sign a form to choose the time period for the ban. These forms can be filled out at the casino, which will submit it to the state, or you can mail one to the Bureau of Gaming Control. (This sounds so much like what was done to the seat switchers in the earlier post. I wonder if they signed self-ban forms without knowing what they were doing.)

       Self-exclusion is a voluntary program, but the lifetime ban is irrevocable, so it should not be entered into lightly. Gamblers who self-exclude are prohibited from ever entering the premises of these gaming establishments, and they will not be paid any winnings if they violate the prohibition. Additionally they will be treated as trespassing, and they’ll be arrested. There could be a fine and even jail time. (I was at a casino recently when a patron was arrested - none of the staff would tell me why. Perhaps someone banned tried to play?)

       The addicted gambler can also choose self-restriction, which is baring himself from specific games such as poker or blackjack, or from specific casino services such as check cashing, rather than from all casino activity. If you have a loved one such as a spouse, or parent, or child with a gambling problem, you can also request “third-party exclusion.”

       Even though they have asked to be excluded from a casino, the urge to gamble in the addicted is sometimes too hard to resist. Enforcement is spotty. Usually the staff does not checked IDs, and if they do, it’s just to make sure young people are old enough to go in. If you visit the player’s club or gamble with a player’s card, their computers will probably detect if you are an excluded player. Some casinos are now implementing facial recognition programs. The casinos check their exclusion lists before paying out jackpots requiring W2Gs, and this is where banned gamblers are frequently caught. But security is a double-edged sword. Sometimes the excitement and extra danger of maybe getting caught fuels the drive to gamble even more. And if you have a gambling addiction, being banned at one casino will just make you more likely to gamble at another one.

       Self-exclusion is something to consider if you have a serious problem you can’t control yourself. But there are other less drastic measures you can turn to for help as well, such as Gamblers Anonymous (for the gambler), Game-Anon (for the gambler’s family),  the CA Council on Problem Gambling, and the CA Bureau of Gaming Control among others. If you need someone to talk to, call 1-800-GAMBLER.

       I’m sure none of you readers have gambling addiction problems, but maybe you know someone who does. If so, now you know how to help him.

Bank Secrecy Act - Why So Secret?

       Has this ever happened to you? Maybe you took a trip to Vegas and had a very, very lucky day. Maybe you won a $5,000 jackpot in a casino when you played that morning, and then hit another big $5,000 win when you went back that afternoon. Sure, you got W2Gs to file at tax time — but did you know that isn’t the only report the Casino sent to the IRS about your play? Did you know they also sent the feds Form 8300, a Currency Transaction Report (CTR), used to alert the IRS to possible money laundering or criminal activity? Of course you didn’t know that. Casinos don’t tell their patrons when they file these forms. Most people don’t know anything about Form 8300 or even about Title 31 of the tax code that requires the casino to file it. Title 31, also called the Bank Secrecy Act, is the part of the code, amended by the Patriot Act in 2001, that deals with the movement of illicit cash into, out of, or through financial institutions. And if a casino or bank sends the Treasury one with your name on it, they won’t tell you they did. It’s a secret!

       When Jill Waters was banned from Pauma Casino for life, the reason given by their gaming commission was her “intent to avoid tax reporting pursuant to Title 31”. Could this happen to you? Could you unknowingly trigger a Title 31 investigation by an act as simple and innocent as too large a buy-in or payout of casino chips at the blackjack tables or too big a jackpot win playing slots? When are these 8300 forms required, and what kind of information does the casino give the government on them?

       Banks and financial institutions have been filing CTRs (Currency Transaction Reports), Form 8300, for customers making cash deposits of $10,000 or more since 1970, along with Suspicious Activity Reports (SARs) for any amount that might suggest money laundering, tax evasion, and other criminal or terrorist activities. You can view this form yourself on irs.gov HERE. 

       Since 1996 casinos with annual revenues greater than $1 million dollars have been defined as non-bank financial institutions and have been required to comply with all the requirements of this law and file CTRs. Two years later in 1998 the requirements to file this form were extended to card clubs. There are card clubs in Los Angles currently being investigated by a federal grand jury this summer for failing to comply with these Title 31 reporting requirements.

       CTRs are required of “money handlers” like banks and casinos and car dealers who are paid $10,000 or more in cash for big purchases like automobiles. They are only required for large cash transactions. Credit cards and debit cards and checks don’t fall under that category. There’s a paper trail when you write a check or deposit one. Currency Transaction Reports tell the IRS about large cash dealings. They help IRS identify people who may have illegal income to hide. They often identify money launderers such as drug dealers or thieves or sports bookies taking illegal bets. They also direct the agency’s attention to honest business people who have done nothing wrong. And they also direct the IRS’s attention to gamblers with large bankrolls won or lost in the casinos who might not have gotten a W2G form for their winnings because they were playing table games, not slots. Not everyone who is the subject of a CTR has done anything illegal.

       CTRs are not required if the cash transaction is less than $10,000. Often they are filed for lesser amounts, however. Box “b” at the top of the form is checked when the report is sent to the IRS if the transaction is under $10,000 but seems suspicious. These are called Suspicious Activity Reports (SAR). A cash transaction of $9,999 would be an example of a suspicious transaction as would two transactions of $5,000 each within a short period of time. SARs are currency reports that are not technically required to be filed because the $10,000 threshold is not met, but which are filed anyway because it looks like the depositor is attempting to structure the payment or deposit in a suspicious way to avoid the government’s knowledge and to avoid the CTR filing. 

       The bank or casino is not required to tell you — and will not tell you — a CTR is being filled out if you don’t ask. If you do ask, they may feel that inquiry is in itself suspicious and file one anyway. Not all cash transactions for large money amounts are indicative of illegal activity or unreported income. Not all trigger an investigation. If you have a small business such as a restaurant or bar, for instance, you easily could have over $10,000 in cash to deposit when you visit the bank with your receipts at the end of the day. But if you are a gambler, and the casino reports large bets or winnings of $10,000 or more on a CTR when you play its table games, be prepared to have IRS auditors review your tax returns and possibly ask you to explain where the money came from, where it went, and how much of it is shown on your tax return at the end of the year.

       Title 31 regulations apply only to cash transactions of over $10,000: cash-in or cash-out. Cash-in transactions at a casino might include actions such as the purchase of chips, bets of currency, purchases of a casino’s checks, exchanges of currency for currency, including foreign currency — all for large amounts of cash, $10,000 or more.

       Cash-out casino transactions might include actions such as redemption of chips, advances on any form of credit, payments on bets, cashing of large checks, reimbursements for customers travel and entertainment expenses by the casino— again totaling over $10,000. 

       Multiple currency transactions are treated as a single transaction if they total more than $10,000 during any gaming day. Casinos also file suspicious activity reports for lesser amounts when it appears a customer structured their transaction to avoid CTR reporting. For instance breaking a $12,000 cash transactions into 3 transactions of $4,000 would be reported as a suspicious activity. For this reason many casinos record transactions as low as $3,000 by a customer and track them to see if there are other actions taken that might cause the patron to reach the $10,000 threshold.

       Minimal gaming is another type of suspicious activity relating to money laundering. In this case the patron puts large amounts of money in play, but gambles very little before cashing out. Money could be laundered by inserting currency into a slot machine or a change kiosk as well.

       Suspicious activities can involve two or more individuals handling the same currency bankroll. This is referred to as “agent activity” by the casino. Agent activity is suspicious because it allows individuals to structure their transactions below the $10,000 that would require a CTR.

       A CPA Joe Oprosko, claims in Indian Gaming on the web that a log is also kept for all cash-to-cash money exchanges in excess of $1,000, larger bills to smaller bills and vice versa. I was unaware of this, and have not yet found another source to confirm this,

       In his article he also gives some real-life examples of money laundering that took place in casinos and were reported to the IRS Criminal Investigation Unit. One involved a major drug dealer who played $100 dollar slots, wagering hundreds of thousands of dollars in order to receive a casino check and W2G to legitimize his income. In another example, a number of customers all bought chips below the reporting threshold and then passed them on to a single individual who cashed them in and received a casino check triggering the filing of a CTR making the transaction seem legitimate. Over a 12 month period, he was named on CTRs totaling $1.1 million dollars paid out, but not one CTR for money paid in.  There are many stories about money laundering HERE.

       If you have been following the news about the indictment of Dennis Hastert accused of structured cash withdrawals from banks and then lying to federal investigators about its purpose to pay a former student he had abused, you have a timely example of these issues. You can read the June 9 report from the New York Times HERE.

       To sum it up, lets go back to the Water’s sisters-in-law. They changed seats when they won their $2,040 jackpot and as a result were accused of evading taxes and were banned by the casino for life. Keep their story in mind when you gamble. Be aware that some casinos are so afraid of being fined for not complying with Title 31 requirements that they sometimes over react. And, most importantly, keep that $10,000 figure in mind and don’t do anything that might trigger a CTR or suspicious activity report if you can. 

Seat Switchers Banned For Life

Laura and Jill Waters -- Banned Gamblers

       Five years ago two middle aged gamblers Laura Waters (62) and her sister-in-law Jill Waters (57) won a $2,000 jackpot at Pauma Casino in Southern California. They also found themselves banished from the casino for life. In addition they were accused of money laundering and told neither of them would be paid the money they had won. Here’s what happened according to the players as reported by J Harry Jones in the San Diego Union Tribune.

       The two women frequently visited various Native American casinos, shared their cards, and split their winnings as many other couples do. On the evening of May 28 they were playing a Super 8 Race slot machine with Laura’s card in the machine when an announcement came over the loud speaker offering $1 hot dogs. Laura left to get two, and Jill moved over to her seat to watch the machine while her sister-in-law was gone. When Laura returned, the 9 yellow cars had come up and the machine signaled a hand-pay of $2,040. Laura sat back down in the seat she had left temporarily, and when the casino worker finally arrived, she handed him her driver’s license. Fifteen minutes went by before a security agent approached the women and asked who pushed the winning button. Jill said she had and explained why they later switched seats.

       He then escorted the two women to a locked room in the back, complete with a bench with built in handcuffs - an interrogation room. During this time the women were questioned on videotape, some paperwork was completed, copies of their driver’s licenses were made, and photographs were taken. After close to two hours, some papers were put in front of them to sign. It was explained that by signing the papers they were acknowledging that they were banned from the casino and could be arrested if they ever tried to reenter. The two just wanted to get out of there by then and so they signed. They complained that they were being treated like criminals for breaking a law they didn’t know existed.

       Later when they looked at what they had signed, they reacted indignantly at being treated like undesirables. Jill Waters wrote a letter of complaint to California’s Gaming Commission. She was later notified that the Pauma Band’s Gaming Commission would hold a closed hearing to review the matter and how they were treated. During that hearing the women were shown an edited videotape of the interrogation during which Jill admitted to having had past problems with the Internal Revenue Service. She said the editing made it appear she was admitting she was trying to avoid taxes by switching seats. She denied her IRS problems had anything to do with the change.

       The Pauma Gaming Commission finally ruled Jill could collect her $2,040 jackpot (which she has done), but said the lifetime ban will stay in effect. The reason given was "suspicious activity and spontaneous statements that confirmed her intent to avoid tax reporting requirements pursuant to Title 31”. Pauma officials were cleared of any wrongdoing by the California State Department of Justice which conducted a separate investigation into the matter after receiving Jill Waters’ complaint letter. That agency agreed the videotape showed a measure of collusion on the part of the players to avoid one person having to pay taxes on the winnings.

       I always liked Pauma Casino and the people who work there, and I felt it was a friendly place to play. But now I’m not so sure. The casino doesn’t seem to have handled this dispute very well. Do we know the whole story, I wonder. 

       This debacle took place around the same time that the government was extending the requirements for Title 31 compliance under the Bank Secrecy Act to casinos. Sometimes when a federal requirement is new, people don’t know how to apply those new requirements very well.

       There’s an article on the internet taken from Indian Gaming written by Stephanie Maddocks in September 2010 to help casinos understand what they were expected to do that was published about the same time these women were banned (July 2010). An earlier article by Joe Oprosko also in Indian Gaming in May 2007 addressed this same topic. Wikipedia says the US Senate Committee on Indian Affairs met Nov 17, 2011 for hearings on this issue. I mention these writings and dates only to show that this Title 31 compliance was a fairly new encumbrance at the time the Waters women were banned, and casinos were just learning how to meet their reporting obligations. 

        I would like to think that perhaps Pauma overreacted in their attempts to comply with these new Title 31 requirements that they didn’t yet understand very well.

       In any case, there’s a lesson to be learned from all this. If you are sharing a machine with a friend when a hand-pay jackpot comes up, don’t try to change who gets the W2G by lying or by changing seats. Just accept it’s the one who pushed the button. You can settle the money split and tax hit later without involving anyone else.

       Watch for coming articles on casino exclusion lists and Title 31.

Hand-pays Part 2

       There are a lot of articles written about gambling.  A few stand out as more credible than others. Among the more trustworthy writers are Michael Schakelford (The Wizard of Odds) and John Robison (The Gaming Guru.) Both have addressed on their blogs a common question posed by their readers: who receives the money on hand pays when one person’s money was in the machine, but another person pushed the button? And both respond with the same answer the casino manager at Pauma gave me when I asked her that question: “Whoever pushes the button gets paid the money.” 

       In John Robison’s article a husband and wife were playing $1 video poker and were dealt a $10,000 winning hand. The husband’s card and money were in the machine, but he and his wife were taking turns pushing the “deal button” and the wife’s spin brought up the big win. She was issued the hand-pay and the W2G. A reader asked if Harrah’s had handled this properly.

       The answer they got was “yes.” Robison said the player’s card was irrelevant; the person funding the spin is also irrelevant. The only person who matters is the person who pressed the spin button.
       You can read the Gaming Guru’s article at this SITE.

       Michael Shackelford’s reader questioned an earlier post where Mike had written that the person who hit the spin button wins the money. “The Wizard” responded saying he had asked three casino executives about this hypothetical situation. They all said the same thing: You can’t win a bet if you don’t make a bet. If you didn’t push the spin button, you didn’t make the bet.

       What if someone else did? He was told that if its your money in the machine, the casino will pay the person pushing the button if you consented to his initiating the spin. If he pushed the button without your consent, [which means he stole your credits] they won’t pay him, and there’s a chance they won’t pay you either. That will be decided on a case by case basis. There's a moral here: be a good customer that the casino wants to keep happy, and be vigilant guarding your machine.

       You can read Michael Schakelford’s article at this SITE.  

       More recently an article on TribLIVE also addressed what to expect when you hit a hand-pay slot jackpot. The writer interviewed Adrian Ashmore, a slot shift leader at Meadows Casino. Slot shift leaders such as Ashmore are involved when the total win exceeds $10,000 at that casino. Ashmore also says the jackpot goes to whoever pushed the “spin” button, regardless of whose player’s club card is in the machine.  

       You can read that article HERE.

       All these sources and many others say the same thing. The person who gets the jackpot is the one pushing the button. None of these articles mention Form 5754, you notice. Are the casinos unaware of this form - or do they just not want more paperwork to complete? Or do they not want the responsibility of completing W2Gs based on possible misinformation from the player in Part I about the people in Part II?  I don’t know. I can understand why the casino would be reluctant to send the government a W2G for someone named in Part 2 (who might not even know he was listed there).  I wouldn't want to do that. I can understand why the casinos would think the 5754 is a bother - just one more burden put on them by the government, one more piece of paper to retain.
       I think -- and my opinion doesn't matter -- that the form needs to be used, but it needs to be revised and require signatures from everyone in Part 2 also. If I were writing the rules, I might also have everyone attach a copy to his  tax return when he files - which is also not current procedure either. But we aren't going to change things, no matter what we think, and the casino is going to report in the way that's easiest for them regardless of how easy or difficult it is for us. So, bottom line - the reported winner is going to be the person who pushed the button. And I guess people gambling with friends need to keep that in mind when they play.

       You might be wondering why I posted this entry since I’m really not telling you anything new that wasn’t in my previous post. I’m just giving you a few additional sources to check that say the same thing. So why am I doing it?  My motives are not the best maybe. I know human nature being what it is, you will be more likely to accept published information if many reliable sources say the same thing - especially when the answer conflicts with our logic. This is too important to get wrong.

       I have one more story to tell about hand-pays. Watch for the write up about Laura and Jill Waters coming soon.