For this answer, we turned to Bob Dancer, author of our Million Dollar Video Poker, who has played more than 1,000 hours in high-limit Slot rooms, which makes him more experienced at this than anyone else around LVA.
You definitely get tax paperwork for a push on a $500 video poker machine, which takes five coins to qualify for full odds. (A machine that takes $2,500 loaded isn't a $2,500 machine; it's a $500 machine with a five-coin max bet.) It doesn't matter that it's a push. Any jackpot of more than $1,200 on a gambling machine requires tax paperwork.
Casinos deal with this kind of situation in numerous ways. First of all, you need to load the machine. Different technologies depend on the player tracking system, but at casinos such as Wynn, if you take out a $100,000 marker, the casino can instantly credit the machine with the $100K -- meaning 200 credits on a $500 machine. Other casinos don't have the technology to do this, but they can create $10,000 "purchase tickets," which can be fed into the bill acceptor. It's a lot easier to insert ten purchase tickets than 1,000 hundred-dollar bills.
Usually, a casino slot department employee sits directly behind the player and records every hand. This is called a "super session." The player signs a sheet of jackpots once (each sheet might cover 20-50 jackpots). In single-line $500 games, there are very few different types of taxable pays -- $2,500 for a high pair, $5,000 for two pair, $7,500 for 3-of-a-kind, etc., so it goes pretty fast. If you're playing a comparatively sized multi-line game, such as $100 Five Play, there can be lots of different taxable payouts. You can get jackpots of $1,500, $2,000, $2,500, $3,000, etc., so it takes a bit longer to do the recording.
(By the way, our new software, Video Poker for Winners!, gives you the number of different-sized jackpots. If you go to Five Play, 9/6 Jacks or Better, ANALYZE --> BANKROLL and you look on the bottom line slightly left of center, you'll see a category called "# of Game Outputs." For $100 Five Play, the lowest three ($0, $500, and $1,000) wouldn't require a W-2G, but the other 403 outputs could. Some are extremely unlikely, but possible. If you click on "Show," you'll see each jackpot and its frequency. Although the $100 denomination isn't included in the software, you can look at $1 and mentally shift the decimal two places, or look at $10 and mentally shift the decimal one place.)
The casino may set an upper limit on what credits will go to the machine. On the $500 game in question, a quad returns $62,500, a straight flush $125,000, and a royal $2,000,000. The casino might have the machine lock up at $100,000 or $500,000. When a machine locks up for large amounts, a slot tech is called in to check various things. (I've had more than a dozen $100,000 jackpots. Every one was checked and there's never been a problem. But I'm always concerned that they might find something wrong and void the jackpot.) It's very unlikely that any casino would let a $2 million jackpot go straight to credits without coming in and checking the machine.
At the end of the session, the casino presents you with one W-2G for however many million dollars worth of jackpots you accumulated that day. Often they give you xeroxes of the accumulated log as well.
