How Do Slot Machines Pay Out Taxable Jackpots? - YouTube

Hey, slots enthusiast!

Has your slot machine ever locked up on you but wasn’t broke?

That’s right! Jackpot! But what happens next?

That’s coming up!

Hi, my name is Jon Friedl. Welcome to Professor Slots, a channel that’s all

about mastering casino slots so you can win your way to success. If you’ve ever

walked into a casino, looked around, and wondered what’s going on, I can help.

One of the most popular slot machine questions online is:

How do slot machines pay out taxable jackpots?

I've assumed this question is about the mechanics of the payout process.

Another upcoming video will explain when slot machines pay out.

Slot machines are special-purpose computers, like a lot of equipment found in

our daily lives like televisions, electronic watches, gas station pumps, cash

registers, bank ATMs, automobiles, baby monitors, and the list goes on and on.

Each of these devices has computer microprocessors, a visual display,

an audio speaker, and some also have a way to accept or dispense money either

physically or online. Beyond controlling the multiple interfaces to

and from the player, a computer manages the odds of a player winning whether

the calculator is within an individual slot machine, within a central server, or

off-site from the casino at the state lottery. At its core, a pseudo-random

number generator (PRNG) is a calculation. This PRNG is an element

of the computer programming algorithm used with slot machines.

PRNGs, or more commonly RNGs, determine the outcome of a player's bet

based on the pre-determined odds of winning as set by the casino operator

within the limited options provided by the slot machine manufacturer.

Winning a jackpot involves using the PRNG twice.

First, to determine if you’ve won a jackpot.

Second, to determine how much you’ve won.

There’s a step-by-step process to gambling by slot machines.

Once a player selects a specific slot machine, that machine operates

to accept or reject the inserted cash, ticket voucher, and reward card.

Next, it accepts the player's denomination and number of credits,

although it will merely reject one or both settings if insufficient funds are

available to make such a bet. Once placing a bet, the machine immediately

selects the latest random number generated by its RNG to determine the

outcome of the bet and well as updating the players club card with the points

earned for placing the bet. Jumping to the end of this process,

the machine turns the reels to show the outcome of the bet. In-between

making the bet and getting the results is a player-machine sequence of events.

During slot machine gambling,

actions and reactions take place between the player and machine.

The player selects a specific machine,

inserts money in the form of cash or a ticket voucher,

chooses from the denominations available,

chooses the credits to bet,

places the bet,

observes the results of the bet including any bonus rounds,

receives winnings from the bet (if any),

then either leaves the machine empty-handed,

cashes out any remaining funds and leaves with a ticket voucher,

or continues playing the machine.

Somewhat outside of this betting process,

the player may choose to insert a player card at any time before or during play,

then later remove it before leaving the machine.

Between determining the outcome of the bet and turning the reels, the

machine executes programming code that sets the physical or video reels to

spinning. The reels turn in such a way which the machine's game designers have

considered most entertaining to the player - such as stopping on reel

symbols for non-wins which are next to the symbols for sizable jackpots.

Oh, so close! Right?

But the bet's outcome was determined when placing the bet,

not when the reels stop moving, despite the entertainment value derived

by the player when observing the "action" of the slot machine.

But let’s dive in and consider a jackpot win. In the event of a win, the machine

executes further programming to activate sequences of lights and sounds while

updating the information display for the player, known as a roll-up.

If a jackpot won is less than the taxable limit, slot players may keep playing or

perhaps instead cash out from that slot machine. The taxable jackpot limit for

slot machines is $1,200. Meaning, if you win $1,200 or more on a slot machine

in a single bet in the U.S., there is an immediate income tax withdrawal

resulting in an IRS Form W-2G. If you win $1,199.99 or less, there is no

immediate tax bill. Be aware this gambling income tax process may not apply

to international visitors playing slots in the United States.

Jackpots that require immediate payment of income taxes results in the slot

machine locking up. Many, many slot players have been surprised by their slot

machine locking up when winning a taxable jackpot. Only a casino employee,

usually a slot attendant, can unlock the machine. Whether a casino is

old or new, whatever notification system is in place, a slot attendant will

arrive shortly to administer a hand payout. During a hand payout,

a slot attendant collects personal identification to both complete a tax form

as well as any other state-required documentation, performs the hand payout,

and unlocks the machine to allow the player to continue.

If the attendant is not carrying enough cash on them or if the player wishes to

have a cashier's check instead of a cash payout, the slot attendant leaves the

player with a receipt and returns a short while later with the check or cash.

Actual hand pay outs require a second casino employee, usually another slot

attendant if the jackpot was less than $10,000.

If the attendant leaves to get more cash for the hand pay out,

they typically unlock the slot machine beforehand to allow the

player to continue betting while waiting for the slot attendant to return.

The most important thing to remember about winning a jackpot

is to make sure you've brought your government-issued I.D.

If you don't have it, then you cannot receive a taxable jackpot.

And, no, your friend sitting next to you cannot claim the jackpot for you - the

eye in the ceiling knows full well it's your winnings and not someone else’s.

Comment below if you’ve ever won a taxable jackpot.

Be sure to share how your first taxable jackpot made you feel.

Stick around for more of my how-to slots videos.

Have fun, be safe, and make good choices! Bye!