At most casinos, you accumulate slot club points. Sometimes these are good for comps only. Sometimes you can redeem them for cash and/or free play.
When you redeem slot club points for cash or free play, this is taxable income. I know that many players “forget” to report this, but it’s taxable nonetheless.
Eventually one needs to redeem these points — one way or the other. In this blog, I’m only addressing the situation where the points can be monetized into free play or cash. Often these points can also be redeemed for comps.
If I have a losing year gambling (I’ve had four of them in the past 28 years), I redeem everything I can before the end of the year. This ends up reducing my loss, and, for professional gamblers at least, reduces my taxes. If I receive $1,000 in free play in a losing year, there isn’t any direct tax implication. If I let it stay in the casino’s control and redeem the money in a year that I win, it has direct tax implications.
If I’m visiting an out-of-town casino, I cash out at the end of my stay whether I’m ahead or behind this year. After all, I’m not sure when I’ll be back. Even if I’m planning to return next year, a lot of things can happen between now and then preventing my return.
I’ve reported that I play at both Harrah’s Cherokee in North Carolina and Eldorado in Reno. For me, these are both out of town. At the same time, these are both part of the Caesars system which allows me to redeem my points at any of their properties — including ones within ten miles of where I live. So in this case, I don’t count these properties as out-of-town visits requiring me to cash out my points at the end of each trip.
But there’s another reason I cash out my points at these properties. That is, at Caesars properties, when it comes time for a host to comp away my food and beverage charges accumulated during my trips, the host is required to spend my points (Reward Credits or RCs) before he can comp anything.
If my Reward Credit balance is zero, the host is allowed to (but not required to) comp my food and other charges. Therefore, I convert my points to free play before I check out.
This is not costless. At Caesars properties (most of them anyway), you can redeem RCs at a 1-for-2 basis for free play. That is, $1,000 in food comps turns into $500 free play. Still, if your host and will comp the food charges, converting the RCs to free play is money in the bank.
If I weren’t a big enough player so the host can comp, then it might well make sense to keep a balance of RCs. But since I usually play enough to earn host comps, I tend to zero out my Reward Credits.
At some Caesars properties, a player is limited to converting 100,000 Reward Credits (worth $1,000 in comps) to $500 in free play per day. If you have a really big balance of Reward Credits, it’ll take you some time to convert them all.
I don’t know the ins and outs of the slot club at other casino mega-clubs that are good at several properties (like MGM, or Penn National, etc.) because my play is restricted at these properties. A smart player will learn the ins and outs of each club where he/she plays.
Bob,
I recently came across one situation where it was advantageous to hold on to slot points. At this casino, points can be cashed out directly for cash and there is also a separate comp account. This casino has several slots that are worth playing. Unfortunately, when a bill collector is filled up, it can take up to 2 days for the bill collector to be emptied and the machine able to take bills or vouchers again. Yeah, I know, seems silly to let a machine that is so popular the bill reader fills up sit idle for 48 hours. Anyway, if you have a bank of slot points, you can still play the machine by turning slot points into machine credits. On 2 occasions, this has allowed me to play a machine even though it would not accept bills.
I also use the funds as an emergency fund in case a play goes badly and I need some cash. At this casino, they MIGHT hold a machine for you for 10 minutes. That might not be enough time to either cash a check or use a line of credit. You might be able to have the line of credit activated while you are at the machine, but that draws attention and I’m not even sure this place would do that for you.
There are some downsides to leaving the money on account ( could be used for other things, you may need the cash immediately, etc) but being able to play a machine when others can’t is one upside.
Years ago MGM gave you cash for your points if you so desired. Then they changed to Express Comps and elongated the time they would remain active. And in Vegas you earned them faster than other locals. I always had the max balance of MGM Express Comps because I earned them faster than I could spend them and always had more than enough Resort Credits given with the offers I came in on. Now I look to lose them, my fault for not being creative in ways to use them combined with my Scrooge DNA, wanting to keep them in my account. Suddenly due to family illness my travel is limited (anywhere) and I fear I will leave 5K worth of comps “on the table” as they say. I hope I can get to Vegas before the end of the year and maybe eat at Picasso and Prime several times, get my hair and nails done and a few massages. Should have taken care of that along the way.
My local casino has the typical 0.5% reward system, that is, $1 played is 1 point earned, and 1000 points is redeemable for $5 in free play (or comps – there’s no extra bonus if you redeem them for dining/rooms/etc.)
However, if you read thoroughly through the benefits of the player’s club, if you accrue 10,000 points, which is normally worth $50, you can instead go to the player’s club, and you can redeem those 10,000 points for a voucher you can take to the cage for $75 cash. This offer I could only find deep on their website, as I’ve never seen it advertised at the actual player’s club anywhere. I would imagine many players are not even aware of this offer.
That’s still not really enough to make any game worthwhile, as the best game they have in the house (afaik) is 9/6 DDB. But I suppose if you get some decent freeplay offers along with free rooms, that could make for a cheap vacation.
I tend to hoard comp points, but it can be a costly mistake if you ever get ejected and end up forfeiting the balance. Some places allow the conversion to free play usually at a less than favorable rate, at other places you may be forced to buy crap in stores you don’t really need to keep the balance low. At national places like Penn or Caesars having a balance can be helpful when you visit venues where you aren’t established or don’t plan on gambling much. I’m not aware of any Caesars properties that will give a discretionary comp anymore (maybe Reno?) without first liquidating RCs. For Caesars I find it useful to use my account to hoard RCs and then keep the wife’s account at bare minimum. I always make her the prime on reservations in such instances so her play can generate the discretionary comp while my RC balance can remain untouched.
I made the mistake of hoarding points at Boyd casinos for a nice meal in Vegas, only to have them remove the discount for using points for food. Now my points are worth less for my upcoming trip.
I don’t generally hoard comps/free play. IMO, you never know when the casino will change its slot club rules, so best to use them when you can. Also, a lesson learned from the Covid shutdown, for me anyway, is to use the comps. Casinos were shut down in my area for over 5 months. And then again off and on for a while thereafter. Even had trouble cashing in a slot ticket that had expired during the Covid shutdown.
In Vegas aren’t the casinos required to pay out your comp dollars if you get 86’d? I have a bunch at a downtown property that I would find really hard to spend all of them.
I learned my lesson the hard way during the pandemic. I didn’t go to a Caesars property for a year and lost out on 60,000 points. We were at the steak house on my last visit and could’ve used them up there.
It was told me that the points at Southpoint will always stay there and have no expiration date if no action is being registered during a full calendar year. I took that statement for granted and left my points in the account as I would like to spend them during the half-off-days that are likely to come this fall.
From Switzerland
Boris
Solid advice Bob, tax wise. Smart.