American Gaming Association (AGA) President and CEO Geoff Freeman released the following statement after the Internal Revenue Service (IRS) released its final regulation on its 2015 proposal for tax reporting of slot winnings.
“Today’s final IRS regulation is a big win not only for gaming companies and millions of casino visitors, but also for state and local governments who would have received fewer gaming tax dollars as a result of what would have been burdensome federal requirements,” said Freeman. “Our grassroots campaign mobilized thousands of casino customers, members of Congress from 11 states urged restraint and compelling research demonstrated that the tax threshold should be at least $4700 when adjusted for inflation. We look forward to continuing to work with the IRS and our federal partners to modernize regulations and protect millions of casino customers around the country."
The final IRS regulations:
• Drops its electronic player tracking proposal altogether (AGA opposed);
• Drops its conceptual idea of lowering slot win reporting thresholds (AGA opposed); and
• On the optional aggregation method, payee ID, and other provisions, the final regulation appears to incorporate many of AGA’s technical suggestions, such as use of gaming day for optional aggregation.
On June 17, 2015, Freeman testified at the IRS hearing on the proposed rules regarding electronic player tracking regulations using player loyalty cards for tax reporting purposes. Read AGA’s IRS hearing testimony as prepared for delivery. The industry’s greatest concern, Freeman said, is that the proposal mandates electronic player tracking. This would pose significant challenges, since marketing tools are not equipped to serve this purpose and customers are uncomfortable with the proposed approach. Further, the mandate is inflexible and inconsistent with existing state requirements.
Freeman also made clear the industry’s opposition to the potential proposal to lower the slot jackpot reporting threshold could be cut in half, from the current $1,200 level to $600. “The casino gaming industry strongly opposes any such reduction,” he said. Such a threshold reduction would render slot machines inactive for significant periods of time. As a result, the move would lead to a decrease in state gaming revenues and harm the customer experience. Additionally, AGA estimated that the threshold would be approximately $4,700 today, if adjusted for inflation. The current threshold was established in 1977.
Before testifying, AGA filed comments on the draft IRS proposal on June 1, 2015. In May 2015, 17 members of Congress from eleven states sent a letter to the IRS outlining their concerns with the proposal. States represented are Arizona, Colorado, Florida, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey and Ohio. “If the proposed regulations are set forth as mandatory, then the gaming industry’s significant labor cost and lost business revenue to comply would be detrimental to local, state and national economies that depend on needed dollars to support critical services,” wrote the congressmen.
Further, Nevada Senator Dean Heller wrote a letter to the IRS citing his strong concerns with the proposed regulation. Nevada Senator Harry Reid also expressed his concerns to the IRS commissioner.
After the IRS announced the proposal on March 4, 2015, the AGA convened experts from member companies for regular meetings to assess each aspect of it, built consensus and formulated an effective response. AGA officials also met with the IRS in person to discuss the proposal in May 2015.
By the end of the public comment period on June 2, 2015, more than 13,000 people had expressed opposition to the proposal by signing a petition, leaving a comment directly with the IRS, or contacting their member of Congress by phone, on Twitter or on Facebook.