First, thanks to everyone who says nice things about this blog. I find it a real compliment when people say they read it. A writer’s nightmare is when no one reads what they write! 🙂
Now to your questions and issues.
Q: A friend and I both play at Harrah’s properties. Which is most advantageous, one of us to be a higher Diamond or both of us to be just Diamond level?
Q:Â We will be in Vegas in March. Where do you suggest the best slot play and bargains are?
Sorry to say it is almost impossible for me to tackle questions like these because the answer depends on so many factors and I don’t know your personal circumstances. What is your gambling bankroll? What games do you play? What is your main gambling goal? Answers to those and many other questions play into the answer to your main question. But the longer you study and research the subject of gambling – in hard-copy writings and on the Internet – the more often you will able to find the answers to your own questions.
Q: Have you ever done an article on what I call the 40-centers. I would love to see what return the casinos get from [penny machines].
The Casino Player magazine gives this information monthly for all US casinos who reveal their financial information. However, as a general rule, penny machines are big profit makers. The return to the player is usually the smallest percentage of all denominations, but they are popular because the low roller can risk just a small amount per hand.   The players who loads up the max coins on most of these machines would do better playing quarters or even dollars where they would get a higher percentage return on their money.
Tax Questions
I’m getting a lot of these, here and in private e-mails. Again, I can’t answer many of them because I don’t know your particular circumstances. Tax issues are so complex and, again, depend on so many individual factors. All I can do is refer you to the book Tax Help for Gamblers for some general help and then suggest you consult your own tax preparer.
One reader here said one of his win/loss statements was wrong, listing a win on a day he knew he wasn’t even in that casino. I am not surprised at that. After some 20+ years of win/loss statements, I dare say that we have had more with wrong or incomplete information than ones that exactly matched our personal records.
Here is how I start out the section about win/loss statements in the tax book: Some people feel they can skip having a diary if they get win/loss statements from casinos at the end of the year. These are valuable as supporting evidence of play, but many tax-court decisions have upheld the IRS position that they don’t substitute for a gambling log.
My co-author Marissa continued:Â The biggest problem with casino win/loss statements is all of the disclaimer language that they put at the bottom of the statements.
The reader who brought up this issue did receive an answer from the casino after he disputed the win/loss statement they sent him, and their explanation just reinforces our warnings above. They wrote: Unfortunately we cannot alter the Win/Loss statement. It specifically states it is just an estimate so if you have your own records I would suggest you use those for tax purposes.
So I suggest no one should stress about their win/loss statements. Just file them away; you shouldn’t send them –  or your diary either – with your return anyway. And if you are audited, the IRS will look at your diary first!  Â
There’s something I’d like to mention re whether comps and extras are “worth it.” If you receive a comp with a nominal value of $X, that comp is only worth your actual “reservation price” for the good or service. Thus, a comped cruise with a face retail price of $1000, but for which you would only have paid $600 if you had forked over actual cash for it, is worth $600. The same calculation can be made for comped meals, rooms, etc.
If a casino offers a comp, that comp is calculated at full retail, but its actual cost is less than that. Casinos like that because they can expense off the entire retail cost (nice dodge!). So let’s say a $100 meal comp costs the casino $50. Your reservation price (the amount you would have paid for the meal) is $75. Both you and the casino benefit. However, if you had to endure more than $75 of theoretical loss to get that $100 comp, you’re actually a loser. If you played with -$90 of theo to get that $100 comp, you’re -$15 if you would only have paid $75 for the meal.
I am stating the above because many here have been critical of playing -EV games for comps and perks. But it’s impossible to calculate the benefit of a comp for anyone but yourself. How much is a free room worth? It depends on what you would have paid for it, as well as the opportunity cost of going and staying there. the value, in other words, has a highly subjective component (as well as an objective component–the wholesale cost of the comp to the casino).
I have been a tax preparer for the past 4 years. It’s amazing how many people don’t keep records of their earnings and expenses whther they’re itemizing or claiming business expenses. The IRS won’t accept estimates. Written logs ( whether handwritten, typed, or computer generated) are what the IRS will look at. Having extra backup verification helps.
I’ve had diametrically opposing reactions to my (non-)recordkeeping in the past, in each case, from profethional IRETH agents. One just laughed and said that the W-2Gs didn’t mean anything, and that the IRS knew that. Another scowled at me and said that my W-2Gs clearly showed that I had made billions of dollars playing 25 cent VP and that if I came clean now, I’d get off with just the death penalty.
You have to keep in mind that just as when you’re dealing with any government agency (or most large organizations), there’s a 90% chance that the person you’re talking to is a complete idiot. Therefore, never settle for one IRS drone’s opinion–they will tell you the wrong thing with a straight face because what the heck, they work for the government, so they can’t be fired for such a trivial thing as constantly giving out wrong information.
Whenever I’ve gotten deep enough into the system (fighting my way past all the zombies), I’ve been told that the IRS does NOT, repeat NOT, consider W2-Gs to be evidence of winnings. Slot club win/loss statements are accepted as proof of net wins/losses, but as that same IRS agent (who was remarkably candid) told me, they really don’t have any way to prove you had a net win for the year, unless you had a monster jackpot somewhere along the line. So if you believe that you had a net loss or insignificant win despite all your W-2Gs, stand your ground. They’ll try to bluff you and threaten you. Deal with them like you dealt with the playground bully. They’ll eventually slink away and find someone else to beat up.
By the way…
I was audited for two years. I submitted my
records via a copy of a spreadsheet. I have
never kept a hand-written log. These records
were deemed sufficient.
I suspect the requirement for a hand-written
log went the way of the 8-Track tape and
dial telephones.