American Gaming Association (AGA) President and Chief Executive Geoff Freeman testified at the Internal Revenue Service (IRS) hearing on lowering the threshold for tax-reportable winnings from slot machines and using player loyalty cards for tax reporting purposes.
In addition to the AGA and some gamblers, a handful of casino executives, industry officials and tribal representatives delivered the same message.
Freeman said that the proposal to mandate electronic player tracking would pose significant challenges, since marketing tools are not equipped to serve this purpose and customers are uncomfortable with the proposed approach if they thought they were being turned into tax collection devices.
“While we recognize the IRS’ concerns and objectives, we question the need to impose mandatory, across-the-board use of the player-tracking tool for tax reporting purposes,” said Freeman. “Rather than mandating across-the-board use for tax reporting, we believe a more targeted approach is possible for achieving the IRS’ objective.”
“The customer would walk away,” Freeman said in an interview after the hearing. “This would have enormous implications not just for loyalty cards in the casino industry but in the broader hospitality industry – hotels, airlines and others.”
“The reduction in the reportable threshold could have a devastating effect on our business, and we strongly oppose the decrease,” added John Canham, vice president of casino operations at Hollywood Casino at Kansas Speedway, a property of Penn National Gaming.
Freeman also made clear the industry’s opposition to the potential proposal to lower the slot jackpot reporting threshold by half, from the current $1,200 level to $600.
The casino industry expects the rule to become such a nuisance that customers gamble less. A Wall Street analysis also estimates the regulation would cause $530,000 in annual losses per casino. And that will lead to reduced tax collections, as well.
