Taxes and the RNG

15 November 2015

By John Grochowski

QUESTION: I've never seen you mention that you have to pay taxes on any royal flush over $1,200. If you do file a long (federal tax) form, you have to get a printout where you have gambled and deduct your winnings from your loses. When you go on a cruise with a foreign line, you don't have to sign a tax form, because they are not registered in the U.S.

When I was on (American-owned) Carnival one time, I won a royal flush on a progressive machine, and won about $1,400. Before they gave me the money, I had to provide them with my Social Security number and they filled out a W-2G form.

I have won a number of royal flushes since I started playing video poker back in 1980. The payoffs have gone down the drain. I recall 6/9 Jacks or Better were the first machines that came out on the market around 1977 in Sam’s Town. Lenny Frome and I use to exchange e-mail about the game before he passed away. I figured anyone that would know about the game, he would know.

ANSWER: Actually, I’ve written a number of times that any jackpot of $1,200 or more will bring a W-2G, which you must sign before the casino can pay you. Most machines in denominations of 25 cents or less max out at a $1,000 payback for a royal flush with five coins wagered, but jackpots of more than $1,200 often build on progressive machines.

I couldn’t agree more that Lenny Frome was a great source. He was one of my first friends in gaming, someone who took me under his wing when I started to write about casinos. For many years, whenever my wife and Marcy and I were in Las Vegas, we dined with Lenny and his wife Rhoda. At the end of every dinner, Lenny would say, “Let’s take a walk, there’s something I want to show you,” and we’d be off to look at games while Marcy and Rhoda had a drink or found a game to play. The Fromes were wonderful people, and the memories are treasured.


QUESTION: Is the action of the random generator completely changed when denomination is changed on a game? For example, if I am playing Jacks or Better and change from quarter to dollar play, would the next hand be the same no matter which denomination I play? I realize choice of a different game would necessitate a change, but wonder about the denomination change.

ANSWER: Different denominations, or even different games, on the same machine do not require different random number generators or even different sets of random numbers. The same virtual cards can be used whether you’re playing for pennies, quarters, dollars, $100. That goes for games, too. To the RNG it makes no difference whether you’re playing Jacks or Better or Double Bonus Poker, and it doesn’t matter if it has a 9-6 or 7-5 pay table. All the RNG does is generate random numbers that correspond to cards.

However, that doesn’t mean you’d see the same cards in one denomination as another. If you were playing quarters and decided to change to dollars, the switch in denominations takes time, and in that time the RNG moves on. It operates continuously even if the machine is not in use. So if you’ve been playing for quarters, won some money and decided to move up to dollars, the first hand you see in dollar play is not the next hand you would have seen if you’d kept playing quarters.