February 27, 2021 - 9:02 pm
I read several articles last week about Rep. Dina Titus co-chairing the gaming caucus and looking again at increasing the slot reporting threshold. This has been floated for years with no action. Here is a little more detail as to one of the reasons “why” this is important.
I chaired the American Gaming Association’s Finance and Tax Committee many years ago, and we developed a white paper that was submitted to Treasury arguing for a greater reporting threshold. At the time, we talked in-depth with Sen. Paul Laxalt, who sponsored the regulatory change in 1977 to increase the reporting threshold from $600 to $1,200. He stated that there was no magic or analysis around picking $1,200 and that anything greater than $600 is good for the industry. In 1977, a $1,200 jackpot was considered substantial.
Our white paper primarily focused on the unattended consequences of gaming withholding, particularly for non-resident Canadians who migrate to warmer climates during the winter, i.e., Snowbirds. Our research indicated that the revenue impact to Treasury was neutral. At the time, the tax treaty between Canada and the United States did not provide for an exemption from gaming withholding as may be the case for residents of Mexico, as an example. Canadians would have withholding, and we found that a large percentage of customers were able to itemize and deduct gaming losses. The withholding at best is a time-value of money calculation for the Treasury. In addition to stopping play, it creates a competitive disadvantage for U.S. gaming companies. In fact, this key point has been a marketing kingpin for the casinos in Windsor as an example.
The $1,200 threshold is outdated and creates significant administrative burden for the industry as well as deterring play from our neighbors to the north. It is time to stop talking and start doing something to update and streamline these reporting thresholds.