Does anybody know how much the casinos withold from winnings (percentage of)? I was wondering if it is a standard percentage or what? Thanks a lot
Do you mean how much they withhold from what a person has won for tax purposes? Or do you mean how much less they pay out than they take in in bets?
The percentage is not standard. It depends on the game.
Casinos do not collect their percentage directly from winners–that is, there is generally nobody saying “You won, and for a $10 wager at 10-to-1 you would get $100, but we have a 10% percentage, so here’s your $90.” But that’s essentially what happens–they just don’t offer 10-to-1 up front, and instead offer 9-to-1.
Casinos most often collect their percentage by offering slightly worse odds than the mathematically correct ones–in other words, if the true probability of a certain outcome is 35-to-1 (the true probability of rolling a 12 in one roll of a pair of dice), the casino might offer 30-to-1 on that outcome (the most frequently offered odds for rolling a 12).
What this really means is that if you lose, you lose your whole wager. If you win, you get less than the true payoff should be. Thus, casinos make money off both winners and losers.
(Note, however, that other games do collect directly: baccarat winners pay a commission to the house if they win on a certain wager, and I believe the house also takes a percentage of poker pots.)
Some games have a high percentage; others have lower ones. I have no references handy, but IIRC, the percentage on bets at craps ranges from 1.4% for pass line bets (and about 0.8% for odds on line bets) to 16.66% for propositions such as Any Sevens. Roulette has about a 5.25% percentage on all wagers except one.
Pretty much any decent book on casino games and gambling will have the percentages for each game and wager listed. I recommend Scarne’s Complete Guide to Gambling by John Scarne because he not only states the percentages in various games in various locations (Europe, Las Vegas, etc.), but he also shows you mathematically how the percentages are calculated. This means that you can (with a little work) calculate your own percentages if you encounter non-standard odds or strange bets in a casino.
I was asking about IRS witholding, I should have been specific, a friend of mine won $1258 and he was wondering what he will take home when he collects. He knows the amount they start witholding is $1199, he was wanting to know if they have a standard percentage. Thanks a lot
For small winnings (less than $10,000 IIRC), they don’t withhold nor report the winnings. My wife once won $1,000 playing blackjack, and they just gave her the cash.
At higher winnings, I know they report the winnings to the IRS, but I’m not sure if they withhold any. Not withholding would make sence: it eases the casino’s paperwork, plus it wouldn’t be possible to withhold for state income taxes, as customer’s come from all over the country.
If not-withholding is the case, it’s up to the winner to either make tax installments, save 28% for taxes, or keep track of losings as well so they can itemize.
Personally, if I ever won that much, I’d just cash in a little more than half so they wouldn’t report it, then come back later and cash in the rest of it.
As I suggested above, he should cash say $700, then return later and cash in the remainder.
there is no withholding from casino winnings
A w-2 form is filled out on any winnings that exceeds 30-1 odds and $600. this form is filed with the IRs and is declared as income. All other winnings must be declared to the IRS at the winners’ discretion.
There are documents that are filled out for wagers and payouts in excess of $10,000, but these are for Nevada Gaming purposes and not for the IRS
Do you have a source for that? I always thought that it was 1200/1 odds (or a win of $1200 for a $1 bet on one individual bet, not session). And I know that it is a W2-G form…as someone that has won many 30-1 bets for more than $1200 in my life, I doubt that you are correct.
Well, I worked at various Indian Casinos in Minnesota, and this is how it worked there (YMMV):
For slots winners of $1200 and above, we processed a W-2G form for the winner. They had the choice of either providing documentation of their Social Security Number (via a social security card or an ID which included it) or having a percentage (I believe 40%) withheld. Also, they could have an additional amount/some amount withheld if they wanted to.
Blackjack winners never had W-2G forms processed for them. I once cashed out $35,000 in purple ($500) chips. There is something wierd about counting out 350 $100 bills, one at a time.
I am a supervisor in a Las Vegas strip casino.
Winning are never withheld for tax purposes reguardless of the amount. The only exception is for citizens of foreign countries in which case the government wants their share before you leave.
Winnings are only reported by the casino when the odds on the win is both greater than 300-1 and the total win is greater than $600.
Of course all winnings most be reported by the customer at tax time to remain completely within the law.
There is no withholding on bingo, keno, or slot machines. On any wagering transaction, if winnings are more than $5000 and at least 300 times amount wagered, tax is required to be withheld at 28%.
For any game, if the winner doesn’t provide his social security number and a W-2G is required, tax is required to be withheld at 31%.
Source: Instructions to Form W-2G. Found them at http://www.irs.gov., your one-stop source for all your IRS answers.
By the way, Harrods, at least, does not report slot winnings properly, or at least they didn’t as of 1998 if you played using a membership card. They would net winnings and losses and send a W-2G only if the net winnings exceeded the reporting requirements (IIRC $600). They should have put the gross winnings on the W-2G.
I think the = or greater than $10,000 being reported has to do with the Bank Secrecy Act. Any cash transaction equal to or more than $10,000 has to be reported to IRS on a Currency Transaction Report (CTR). IRS just reviews them for any indications of money laundering, not for tax purposes.
As far as netting the winnings and losses, you of course must report the winnings, but can only deduct losses (to the extent of winnings) if you itemize your deductions on a Schedule A. If your loses are big enough, you might be able to itemize even if you normally don’t. This doesn’t apply to a professional gambler of course. I’m curious, when this was discovered, were those people who received the erroneous forms required to file an amended return?
The first time I read this, I thought it meant your employees walked around naked. sigh
No winnings are ever withheld!
CTR’s are not filed with the IRS - that is a Nevada Gaming
form that is required for money laundering prevention.
Only the 300-1/$600 rule (horse racing, slots, keno and some sports bets are the most common) requires an IRS document but that does not involve withholding-it is only a reporting instrument.
I realize that there seems to be some disagreement on this.
I didn’t realize this was going to be a debate.
So win as much as you can and see for yourself what happens.