There is one matter that I didn’t see mentioned; whose casino club card was being used? If Bob gambles for Tim with Bob’s card, the casinos absolutely would care about that, especially if there were some sort of card-based promotions involved.
Other than that, though, it shouldn’t be a problem, although they should agree that if there is a W-2G generated in Bob’s name, then Bob should keep enough to pay the tax on it, or at least have Tim pay Bob back the appropriate amount when Bob does his taxes.
If they are above the amount that triggers IRS reporting, which may include withholding of some of the winnings, then the casino will need SSN and other information. Tim can hand all his chips to Bob to cash out and Bob can then handle the paperwork, this happens at the cashier’s cage not the table or machine. Or Tim can use Bob’s player’s card (casino policy may frown on this but nothing legal forbidding it) and therefore create Bob’s paper trail there.
The game does matter because some games have different reporting standards - most notably poker and Keno. Additionally there may be different reporting standards based on how the money is used - if you win $10000 it will be reportable, but if it’s on a single hand and involves losses at the same time, probably not.
Regardless of reporting, Bob needs to do the taxes properly.
Gifts are not the case and irrelevant as they are not taxable to the recipient.
It doesn’t matter who the casino thinks won. Casinos are not courts or legislatures. It doesn’t matter to whom the casino gives the money because it is not decisive of who is ultimately entitled to the money in the context of the OP.
There may well be legislation that exempts the casino from liability if it pays out winnings in a certain way (such as to the person that pushed the button). But that is not decisive of who is ultimately entitled to that money.
Think about it this way – your car needs repairs and you give it to your friend Tim to take to the repairer. After the repairs are complete you go to pick it up and find that you are competing with Tim who claims the car should be given to him. You produce ownership papers and Tim produces some fake ownership papers (because he’s an asshole).
It is entirely possible that in this scenario there is legislation that says the repairer is entitled to give goods back to the person who presented the goods to them, and that if they do so they are exempt from liability if they give it the wrong person.
No, it doesn’t-and I’m not saying it does based on legislation that merely makes the casino not liable. What I am saying is that if I put my money in the machine and my friend pushes the button and the casino pays my friend the $100k that I believe is mine I’m going to sue someone . If there’s a law that says the casino is not liable, I’m going to sue the friend. I couldn’t find any instances where that happened. Not even Jan Flato , who got media coverage about his claim. Which sort of suggests to me that he couldn’t find a lawyer who thought he could win
After all , if the garage gives Tim my car I’m not going to say “ oh well , it’s mine but the garage gave it to him and that’s the end of that” . I’m going to do something to try to get my car back. Maybe if it was a junker that wasn’t worth the trouble - but I’m sure going to do something if it’s a $100k car that Tim took.
I don’t see why it would be impossible to have a law that says unless there is a formal, written agreement otherwise , the person who pushes the button or buys the lottery ticket is the presumed winner.
There are lots of complex financial arrangements in gambling. Poker players get staked. Backjack teams share bankroll. Players lend each other money. Pros hire runners. Friends give Vegas-bound friends money to bet on their behalf. Office workers pool money on lottery tickets.
In the end, you owe tax is you profited from the proceeds of gambling. No matter who pushed the buttons or carried the bankroll, if you got income from gambling, you pay tax. That’s my understanding of American law.
I don’t know about you but a good 50% of my working life is dealing with legal issues for which there are no decided cases on point. There are any number of reasons why there may be no decided cases on this point, and it is an extraordinarily long bow to say “there are no cases on point so it must mean the law is settled on this point”.
Summarising all the above, it seems that in theory, whoever gambled - source of money - is in fact liable for tax on his profits. The fun part is proving it.
The problem comes when the casino (or asshole agent) refuses to validate that claim. Then it comes down to the courts -whose money is it? where should it land up?
The IRS probably is less concerned as long as someone pays the tax, and it does not appear the attribution of winnings is a scheme to minimize taxes or provide a gift. I.e. Tim should have a paper trail of the money if it’s his - savings account history, bank withdrawal slips, or evidence of previous big payout explaining the source of the bet.
There have been a few good cases in Canada. One involved some people who were excluded from a pool since they were the ones working during a strike. Their argument was that minor wins (free plays, $10 winnings, etc.) were ploughed back into the pool, so technically they claimed still had a residual interest in the pool. Other cases included one where a maid bought the ticket for her employer, who then promised she would get a share of the winnings as a “thank you”. IIRC, then the employer’s adult child got involved and denied the ticket was the mother’s. Nothing brings out a good dispute like serious money.
While lottery winnings are not taxed in Canada, I’m told if I win the Powerball I’ll still pay a 25% tax to whichever state sold me the ticket. (When the Powerball was $1B, it was mentioned that for states like North Dakota, the tax would be a substantial perecentage of their annual budget.) Just, nothing payable to Revenue Canada.
I am not an attorney, but this is an interesting question.
Briefly, googling around, it appears that (at least some) casinos have rules which don’t permit betting by agents.
This is from MGM Resorts for sports betting, but it may be possible that
There are a number of sources online which don’t seem particularly authoriative, but do suggest that casio policies are that the person hitting the button is the one who collects the money.
Here is an article which says that proxy betting on sports is illegal in many places.
The question then is if proxy betting is prohibitted by casinos, what is the legal status of an agreement between the parties?
If Bob has an agreement with Tim, as per the OP, this may likely violate the conditions of the establishment. However, the casinos seem to treat it as a contract between them and the person who places the bet, and not to the person who fronted the money.
I wonder how the IRS would treat this.
There is a question about the legality of proxy betting for the particular jurisdiction.
Second, if there aren’t any laws against proxy betting, but it violates the condition of the contract between the better and the house, how does the affect the contract between Tim and Bob?
A discussion I had with a lawyer about contract law once upon a time, he mentioned that the courts of course will not enforce illegal contracts. (I.e. the court will not force Bob to give Tim his share of the bank robbery) So the question is, is agreeing to violating the terms of the casino technically an “illegal contract”?
Then, can Tim put Bob’s name on the IRS form? I assume the casino when they ask for the form also want ID to ensure they are not paying the winnings to “Michael Mouse” for the IRS to chase; and would not accept a form that indicated their rules had been broken.
(I once helped with a charity bingo, and apparently bingo was a favourite weekly passtime of welfare ladies. The welfare department was interested to know if anyone won bigly while collecting welfare - $1,000 was the number mentioned. Not sure how this was handled, it was above my pay grade as a volunteer).
Does the casino need laws to protect them from liability? If they state that they don’t recognize agents and consider the person who pushes the button as the bettor, then would they have any liability if they paid that person?
Unless the local laws specifically forbid proxy betting, then it should legal, but would the law consider the arrangement to be two separate contracts? One between the casio and the person pushing the button (Tim) and the other between that person and the one proving the money (Bob.)