If you're dealt a royal flush on a Hundred Play video poker machine, you're issued a single W-2G. In fact, all line winners on one "play" of a multi-line machine are totaled together and are considered one "hand."
For example, Brad Scott, Jean Scott's husband, was once dealt a royal while playing a quarter Hundred Play machine. His jackpot? $100,000. His W-2G? $100,000.
Note that the IRS requires you to report all winnings. This is true whether you receive tax paperwork or not. This doesn’t mean that if you cash out more than $1,200 on a slot of VP machine after a period of play, you have to be issued a W-2G. It’s required only for the win of $1,200 or more on one hand or spin.
Here's a quote from Chapter 5 of our book Tax Help for Gamblers, by Jean Scott and Marissa Chien, that address the issue of W-2Gs and the claiming of gambling winnings.
"Both players and casinos harbor some widespread misconceptions about W-2s. First, most players believe (or want to believe) that if you don’t get a W-2G, you don’t have to report that particular gambling win. And this viewpoint is supported by information in print, even from otherwise accurate gambling writers, seeming to encourage players to look for a machine with a top jackpot under $1,200.
"Surprisingly, even the casinos seem to encourage this kind of thinking. I’ve seen many slot machines with a $1,199 top jackpot that seem to give the appearance of circumventing tax law. Some casinos have reduced the payoffs slightly on some VP winning hands so the jackpot is just under the W-2G-issuing amount of $1,200, or have created a high-limit slot machine that replaces W-2G-generating jackpots on a primary game with lots of bonus wins on a secondary one, of course keeping each one under that magic $1,200 figure.
"One casino went so far as to rename some of its VP machines where management had fiddled with the schedule so there were fewer W-2G jackpots. They even sent out press releases, touting the new "duty-free" machines: Duty-Free Double Bonus and Duty-Free Double Double Bonus. I’m not sure whether the short tenure of these games was due to a lack of play or the casino realizing that it might not be wise to so obviously promote the erroneous idea that they could eliminate your tax liability. It’s one thing to try to cut out cumbersome paperwork and irritatingly long delays for your customer; it’s another to encourage them to break the law.
No matter how shrewdly gambling writers and casinos may seem to be steering you down a different and dangerous path, you’re responsible for reporting all gambling wins, and whether you get a W-2G or not has no bearing on that. Just because many people don’t report gambling wins when there’s no W-2G evidence, that won’t help you in an IRS audit."
Proceed at your own risk.
