Taxes, game creation and penny machines

7 June 2015

By John Grochowski

QUESTION: I was playing on an electronic roulette table game machine. On one spin I made three outside bets totaling $745 and winning $1,240. After state and federal tax I got $821.11, a $76.11 profit. What's up with that!

ANSWER: The federal government requires casinos to have you sign tax form W-2G on any win of $1,200 or more on electronic games. Whether the casino deducts taxes on the spot is up to state and casino policy – that is not a federal requirement. However, the IRS does collect taxes on the entire amount of the win, without a deduction for your wager. Regardless of whether your bet is $745 or 40 cents, the IRS just sees it as a $1,200-plus win.

Provided you keep adequate records, the IRS does allow you to deduct gambling losses up to the amount of your winnings if you itemize deductions on your return. If you plan to itemize, you should keep a gambler's log, noting casino name and location, date, time, game played, amount of buy-ins, amount of cash-outs, and net win or loss on each game you play. Some casinos will provide you a record of your wins and losses for the year through their player rewards systems, but it's best if you have your own detailed records.


QUESTION: I was wondering if you can give me some suggestions on how to go about presenting new casino table games and to whom.

I have the idea, I have the rough layout, I need to patent and register them and refine them; but after it is done, who would I go to?

ANSWER: Marketing a new table game is a really tough go. Table games space has been shrinking for a couple of decades as casinos have turned more and more to slot machines, especially penny slots. There are basically two ways to go. You can try to sell it yourself, which would mean contacting table games directors at individual casinos to see if you can find one who will give it a trial. It's an arduous process, and sometimes even a really good game can find no takers. The upside is that if you can find someone to give it a chance, and it performs well, it becomes easier to sell to others.

The other route is to try to see if a larger table games distributor such as Galaxy Gaming or Bally Technologies, which owns the company formerly known as Shuffle Master, is interested in it. These companies have more marketing muscle, but you will make much, much less money per table from them than if you are able to market it yourself.

Nowadays, many games find a home online before they find a place in casinos, but I don't know enough about online distributors to point you to a company to approach.

I wish you luck.


QUESTION: Why do they call it a penny slot machine when I don’t have the option to play one line for a penny at a time? If the least it will let me play is 40 lines, why isn’t it a 40-cent machine?

ANSWER: I’d say it’s called a penny machine because of the minimum bet per payline, but I’ve seen machines that not only require you to play all the lines, but also have a minimum two-coin per line bet. That’s not a penny machine in my book; it’s a two-cent machine by the “per-line” definition. Players do need to check the minimum bets before they push the button.