iGaming Daily

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One big beautiful bill act, one not so giant leap for casino slot players. While the US budget bill hits headlines in the gambling industry for the controversial measure to reduce the amount of losses that gamblers can deduct on their taxes, buried in the 800 page text was another measure that makes what the American Gaming Association called a long overdue change on casino floors. We'll discuss what that change is, why it matters in the first half of today's episode.

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before we hand it over to SBC's managing editor, Jessica Wellman, who was on site for some fireworks at the National Council of Legislators from Gaming States Summer Conference last week. I'm Charlie Horner, and today I'm joined by SBC America's reporter, Tom Nightingale. Tom, it's great to be on with you. How are you doing? Yeah, we don't get to do these. I don't think this is our first one of these together, isn't it? So I know you're off and on with Jess.

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I've been on with a few others. So yeah, good for us to work together on this combination, see how this works out. Yeah, you know, we'll see. This might be the birth of a wonderful new double act, who knows? It could, it could, it really could. hope it is. However, if listeners are thinking, I really wish that Jessica was on. Don't worry, she will be here in the back half of the program.

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But for now, Tom, we're going to talk about the one big beautiful bill act. It's obviously been huge, you know, just politically, generally in the United States in recent months, but it has a specific gambling angle in here. And you were one of the first people to sort of break this story. So could you just give us a bit of an overview about what it is we're talking about here? Yeah, so I mean, we'll start off.

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As certainly everybody involved in US gambling has long since heard by now, we'll call it the OB-BBA, although I don't know that's actually shorter than saying the whole thing. The headline measure from that has been the gambling, the deduction in how much of their losses in a taxi a gambler can deduct. Previously, they could deduct all of their losses within certain conditions. Now,

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That's been cut to 90 % and there's been uproar because people suggesting quite rightly the maths works out that you could feasibly like break even or perhaps, you you could break even and then pay tax as if you won. So you pay tax on winnings that you didn't actually make. That's been the headline. Been a lot of been a lot concerned about pushing gamblers into the black market or maybe even like threatening professional gamblers, livelihoods, like the livelihood of high rollers and stuff.

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There is another angle to this. but sort of buried halfway through is a measure that appears to change the threshold for tax reporting on slot machine jackpot wins in casinos. Now, the reason for some context here, like the reason this is a big deal and the reason why the American Gaming Association has spoken to us and said that they're so pleased with it and it's such a big deal is that

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For the past 48 years, casinos have been required to shut down a slot machine, often for up to about 45 minutes, reputedly, and immediately issue a player with a tax form whenever a player wins a jackpot of $1,200 or more. Now, $1,200 in 1977, decent amount of money to win on a jackpot. $1,200 in 2025, you know, I wouldn't...

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I wouldn't sniff at winning $1,200 on a slot machine chat part myself, not complaining, but it's not exactly break the bank kind of money. Like these machines can pay out hundreds of thousands of dollars, even say seven figure sums. it's a pretty crazy low threshold for the whole process to have to temporarily shut down. Thanks to the change to tax code, it seems that the minimum threshold for

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slots from miscellaneous gambling has now been upped to $2,000. So it's not a huge increase, but it's the first one since 1977. And that will also increase with inflation year upon year from next year, which is something that obviously hasn't happened given that it's been the same amount since the late 1970s. I think you mentioned in the intro like that, the AGA are very pleased with it. Like the American Gaming Association told us that it's a long overdue modernization.

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And they described it as a hard fought win for the industry because it's been something that has been campaigned for for a long time. Yeah. I mean, it baffles me that it wasn't pegged to inflation originally. That's just seemed like a bit of an oversight in the original creation of that sort of tax. And yeah, I guess I'd like to touch on the actual process of how we got here, because we know this bill, this act was, you know, essentially just to cut

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taxes across the board in the United States. It's part of the current administration's mandate is to slash taxes and spending. But there's over 800 pages of worth of measures in here. And while it does seem though that the administration just think, oh, there's a tax right here, let's just cut it. There's been a process here.

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How has that process worked and how did we end up in the situation that we are in now? So, mean, with respect to, know, I can't claim to be an expert on how these massive omnibus budget bills work. think you said 800. Yeah, I believe it's 870 pages, which is just monstrously long, let's be honest, for a piece of legislation. With respect to the tax, you know, with respect to this change, you know, it's I said it's something that

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the AGA have been calling for for years. They issued something in think 2022 urging that basically the government pull its finger out and make this change because it's not, think the concerns are not only that for players, it's a really low amount to have to kind of stop and declare and sign a tax form, you know, for, but also for casinos, like what, what, what a pain in the backside to be frank, if these slot jackpots that now

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Presumably again, not a regular casino floor patron myself, but presumably these slot machines paying out $1200 in a jackpot is more frequent or at least less eyebrow raising now than it was nearly half a century ago. So to have to stop all this, you know, shut down temporarily and go through all this red tape, you know, the American Gaming Association have said numerous times that this needs to change. It is not just them.

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There is a state law, a very prominent state law, a very prominent lawmaker in the US, not state, sorry, federal Congresswoman Dina Titus. She is out of Nevada. She's also a co-chair of the Congressional Gaming Caucus. Very, very influential and has her say in most things that would relate to Nevada gaming, you know, and gaming nationwide, really. She and her congressional

07:32
Gaming Caucus Coach, I have introduced an act for several Congress sessions now. The Shifting Limits on Thresholds Act or SLOT for short. love an acronym. I mean, we'll talk briefly later about the Fair Bet Act because the acronym game is strong with these guys. But they've introduced the SLOT Act now for several Congresses. Advocating for this.

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increased threshold. They actually will touch on this a little bit later, but they actually want the threshold to be increased. I said it went up from $1,200 to $2,000. Both the AGA and Reptitis have wanted it increased to $5,000 instead because it's worth mentioning that I think $1,200 in 1977 is about $6,300 now, I think, adjusting for inflation. So the rise to $2,000 is really pretty low, but it's at least a step in the right direction as Congresswoman

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called it. They introduced the slot act numerous times, including this year, they reintroduced it in March. Didn't make very much progress, but to work out the best way to make this change that they wanted, Reptitis and her co-sponsors consulted with the House Legislative Council, Legal Council, and came up with this language that amends a section of the tax code section 6041.

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The language used in the slot act is not exactly the same as the language that was ultimately used in the OB-BBA. Reptiles wanted to introduce a a subsection that related directly to slots. But the broad strokes are the same. It's a change to section 6041 that would change the, that would, that would change the tax code and allow this threshold to be, to be increased. However, however, we're led to believe that some

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analysts out there sort of pouring hot water on that a little bit. It turns out that the United States tax code system is a little bit more complicated than you might assume. But do you want to just sort of give the listeners a bit of an overview of what that sort of argument is essentially? Yeah, I mean, is. Some have suggested that basically the tax form that we're talking about here

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gambling tax form that we're talking about is called a W2G gambling tax form. That's the one that's issued to players when they exceed this jackpot on a slot machine. They have to sign it. They have to be issued with it then and there, shut the machine down. Some have suggested that that typically is dictated by a different section of the tax code, section 3402. Section 6041 generally has been used in the OBB

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B, A, three Bs. And in the Slot Act, it generally refers to more like miscellaneous gambling. But Reptitis, as I mentioned, and her co-sponsors went to the House Legislative Council to work out the best way to do this. In the Slot Act itself, which directly relates to slot thresholds specifically, it is section 6041 that is cited.

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And so that language and not quite its exact form, but very pretty similar form has been brought over to the OBBA. Like you say, US tax code, pretty complicated. And particularly when you have like an 870 page bill. Yeah, it's not your it's not your bug standard legislative change. Yeah, absolutely. So, you know, the

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The bill has been passed, the language is in there, you've spoken to the American Gaming Association and Reptitis I believe. Everyone's happy then? Everyone's fine and dandy? This is a big win for the industry and we can all move on to the next big legislative push? Yeah, wash your hands, walk away? Not quite, no. As is often the way in these particularly US legislative stuff I've found.

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There's a lot of sort of compromising going on. We mentioned before that with inflation, it's like $1,200 goes up to $6,000. Both the AGA and Rectitis and other lawmakers have advocated for an increase to $5,000. What we actually got is an increase to $2,000. it's pretty, you know, it's pretty far short of the standard that they'd hoped for. Rectitis interestingly noted that the IRS

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their own advisory council, the IRS being the US federal kind of tax and financial body. The IRS's advisory council themselves advocated for the limit to be raised to $5,000. So it's not like this is a figure that's just been plucked out of the air. Very interestingly as well, the American Gaming Association noted to us that there is a precedent for using $5,000.

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as a benchmark for other tax reporting requirements in gambling, such as think poker players, if they win, if their winnings exceed $5,000 in one tournament, that's when they are issued with a tax form and they have to go through this rigmoral. So it's not like this $5,000 figure has been conjured out of thin air. It's based on a of precedent, it's based on an IRS advisory council's own recommendation. So

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I think there's a little bit of, there's, there's, there's, um, the AGA and Reptitis and other lawmakers are pleased. I think that this change, we've at least taken what, what Reptitis called a step in the right direction, that she did note to us that she believes it's still inadequate for where casino gaming is in 2025. She said she's going to continue to push with her slot act, which has the similar language, but a specific kind of

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carve out or shout out for slot machines specifically. She's going to continue to try to push that, which does have the 5,000 limit involved. So I think it's, we'll call it a, what's the right word? You know, it's kind of a limited win, I think, you know, it's it's a step, but it's not what the industry had been hoping for. It's it's a work in progress. Isn't everything Charlie, isn't everything. We've got to keep pushing. We've got to keep pushing Tom. Anyway, Tom look.

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It's been great to have you on. I'm sure this double act will continue to roll on. I'm looking forward to the next one. But we've got to head into a break and then after that, we'll come back with our managing editor, Jess Wellman, who will bring you the latest from what was a particularly raucous affair at Nickelgees. Hello, everyone. It is Jessica Wellman, managing editor of SBC Media.

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And I know I usually treat you with an on-site update when I am at conferences, but I've got to be honest, this summer meeting of Nickel Geese was so insane that I had nary a minute to record a thing. For those of you who don't know, the National Council of Legislators from Gaming States is a group of largely regulators and lawmakers that meet twice a year. They had their meeting in Louisville, Kentucky.

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last week. So being a local, I just drove the hour over and hung out with some of my favorite people in the industry, as well as some industry adversaries. There was a panel on prediction markets that was really the talk of the entire event because one of the counselors for Cal-She, Josh Sterling, who is from a firm called Mill Bank, he used to work for the Commodity Futures Trading Commission.

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was willing to be on a panel with people from the gaming industry to debate this court case. And he, like a solid reality television star, he was not there to make friends. Some of his comments just really did not land. We've got the full rundown on SBC America because of all the things that he said.

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which largely were that there should be no question, and obviously he's a lawyer who's gonna say his side is a slam dunk, but that the federal government doesn't have much of a confusing situation on their hands when it comes to this decision. He also just kind of came after people in the room when talking about consumer protections.

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Some of the others on the panel were expressing that states have difficulty syncing up with one another and that regulators often have a lack of resources to get things done. And here is what Mr. Sterling had to say in response to it. I'm going to speak personally as a taxpayer. You'll pardon my French, but I just wish once in my goddamn life the government would not say, boy, if only we had more resources, we could do our job. I mean, it's kind of ridiculous.

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It's not hard. And if that didn't land, he decided to then go even further, which is to suggest that the idea that the CFTC even have responsible gambling and consumer protections was counter to his approach to things. He noted people are adults and they're allowed to spend their money however they want it. And if they lose their shirt, that's on them.

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He was very persuasive in the panel. He certainly knew what he was talking about and was very well-spoken, just came with a very different set of ideas about what the role of regulators are in this. I will note that on the final day after Sterling had departed, Massachusetts gaming chair, gaming commission chair and fellow Kentucky and Jordan Maynard was up on stage for one of the last panels and.

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said, you know, something to the effect of, heard someone say, if people lose their shirt, who cares? We effing care, except the effing was not rated peachy. It raised some hackles that one, and it certainly just dictates and indicates how much this case is going to have an impact on things and how on edge people are about it, but

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It was almost as if something was in the water because from there, conferences that are usually pretty milk toast and maybe someone has one passive aggressive remark ended up being quite aggressive. There was a panel about video gaming terminals in which there was a lot of contention between regulators and lottery companies as well as representatives from the machine industry.

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arguing who benefits from these and got very contentious about in particular the small town of Cairo, Illinois. Yes, spelled like Egypt, pronounced like the syrup and the impact VGTs had on it. The last one though that we are going to have a write-up on SBC America's, you can go and look at it after the show, was the cannibalization panel and iGaming.

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There are more and more studies that continue to report a wide range of whether or not this impacts online casinos to land-based casinos. Somebody from Macary had a report that suggested about a cannibalization rate of 15 % kind of in line with what the innovation groups research suggests. There are research projects on the other side that suggest there are no.

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cannibalization effects and pay a lot of attention to the fact that the market itself is growing and more tax dollars are going in. Being in Louisville, Kentucky, Shannon McCracken of Churchill Downs was available on the panel. Churchill Downs, a member of the National Association Against iGaming. And John Pappas, who was representing Idea Growth, a pro iGaming organization, called McCracken out and just said, you know,

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As much as you're sitting here and saying that online gambling is bad, Churchill Downs arguably operates one of the biggest online apps in the country and it's ADW app, Twin Spires. McCracken handled it well, I will say. She knew that this question was coming and she was prepared to note that this was in support of horse racing events, that it was fundamentally different than an online casino experience and argued.

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that it was not the same thing. Papas followed up by asking what the cannibalization rate of live racing was, but unfortunately moderator cut him off before we could get an answer. And then if that weren't enough, I'm gonna shout out Andrew Winchell of Better who decided to ask that panel, isn't this akin to rolling back online banking to save the jobs of bank tellers?

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attorney Josh Sterling put it, there was a lot of sentiment about lots of products that we didn't outlaw the horse and buggy, Sterling said, Ford just made a better product. Whether it's a better product, whether it's against the law, those things remain highly, debatable. And I think we're going to continue to see them get debated, both in California, in hearings, as this bill moves forward and throughout the industry.

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So check into SBC America because we have rundowns on every argument there is and we'll have even more as we sit and shout 2025.