Ask the Slot Expert: Withholding at New York's racinos

Love your columns and the great advice. This past weekend I was playing at Monticello Raceway in New York, which is operated by the New York Lottery. I was playing a Vegas Hits slot machine and hit one of the bonuses and was fortunate enough to win $690. Right after the bonus, the voucher printed out and said "limited voucher" above the $690. When I went to the cashier, he asked me to fill out a W9. I never heard of this because usually you only get a W2 if you win over $1,195. Please shed some light into this and keep up the great work.

Sincerely,
Sam

Dear Sam,

Thanks for the kind words.

As you pointed out, Monticello Raceway and the other racinos in New York state are operated by the New York State Lottery. When you win at a New York racino, you've essentially won a lottery drawing. According to the instructions for Form W-2G I found on the IRS website, you get a W-2G for lottery winnings over $600. (I've never won more than toll money in New Jersey's lottery, so I'm sorry to say I don't have any firsthand experience with this.)

New York has another reason for getting your Social Security number. When you win more than $600, state law requires the casino to check a government database to see if you owe back taxes or child support. If you do, what you owe will be withheld to pay off your debt.

The threshold for a W-2G at a private sector casino is $1,200 or more, so you could win $1199.99 and not get a form.

Jackpots for all,
John

I noticed at Resorts World Casino in New York they stopped tax from all winnings over $5,000. Normally when I am visiting the U.S. I do not get any tax stopped on winnings over $1,200 as a 'foreign pay' (U.K. passport holder and U.K. resident). A U.S. player I was waiting at the casino cage with also had tax stopped even though she argued that at other casinos she always received her winnings gross. Is Resorts World a different 'type' of casino to, say, all those in Atlantic City or Foxwoods, etc.? If so, what are the different types and what are the tax withholding rules?

Stuart

Dear Stuart,

I suppose "stopped" is a Britishism for "withheld" in this context. Two nations divided by a common language.

Resorts World is a different type of casino. As discussed in the first question, the racinos in New York state are extensions of the state lottery and subject to the tax rules of the lottery.

According to the Legal Information page on the New York lottery site, the "New York Gaming Commission is required by law to withhold Federal and New York State income taxes from taxable prizes over $5,000, regardless of the winner's place of residence." According to the New Jersey lottery site, the law requiring federal withholding of lottery winnings is -- get this -- the Federal Energy Policy Act of 1992. I suppose either the withholding was designed to fund some provision of the act or it was an irrelevant addition tacked on.

It used to be so easy to write about slots and casinos when I first started. All slots were pretty much the same and only three places (Nevada, Atlantic City and Tunica) had casinos of any consequence. Now, we have Class II and Class III machines, not to mention video lottery terminals -- and traditional casinos, Native American casinos and racinos -- each with slightly different rules and each operating slightly differently from the others.

The best ways to find out the withholding rules at a particular casino are to check its website and ask at the cage.

Jackpots large enough for tax forms for all,
John

Is there a way to tell if video poker machines are networked off the same server?

All video poker machines in a modern casino will communicate with a central server to report performance, player activity and problems.

I think what you really want to know is if a machine is a Class III video poker machine, which deals from a fair deck, or a Class II machine, which is like a bingo drawing or scratch-off ticket. I know two ways to spot a Class II machine. If the machine has a bingo card displayed somewhere on the screen, it is a Class II machine. Also, if there is some sort of "fairy godmother" feature that turns an otherwise losing hand into a winning hand or just awards you a consolation prize, that's also a Class II machine.