Was I Responsible for a Machine Malfunction of $4,000?

I hit a $4,000 royal in Illinois and the machine gave me a TITO instead of locking up for a handpay. Management corrected it after I notified them. Was I responsible for my own hand pay or is it the responsibility of the casino only?

The question is, were you responsible for notifying the casino of the malfunction of the machine that issued you the TITO instead of locking up for the hand pay?

We can't say for sure what the gaming regulations are in Illinois, but we'd say that in most cases, if you hit a royal flush and the machine gives you a TITO instead of triggering a hand pay, it's the casino's responsibility to be aware of that, then to investigate and address any malfunction.

However, as the player, it's almost always a good practice to notify the casino immediately. This avoids any potential "misunderstandings" or issues that might arise.

If you tried to get away with avoiding the hand pay and tax consequences and were caught, you could use the old cheater's line, "Oh. Pardon me. I didn't know." However, if you're a regular player at that casino or you've been issued hand pays previously there, that might fall on deaf ears.

So in our humble opinion, it's best to report the malfunction, exactly as you did, which not only helps ensure that the situation is resolved fairly and quickly, but also demonstrates that you're acting in good faith as a player. The casino definitely wants to know when a machine malfunctions, especially to the extent of not locking up on a W-2G event, so they can correct the problem.

And, of course, either way, it was your responsibility to claim the $4,000 win on your taxes, with or without the "taxable" paperwork. This is a familiar refrain to regular readers of QoD, but it always bears repeating, especially with tax season upon us. All wins are reportable to Revenue, whether the casino knows about them or not.

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Comments

Donzack Feb-03-2025

Thanks

I submitted this qod. They had just moved all the vp machines from one end of the casino to another and had to restart all of the machines. After I notified management they checked all of the recently moved machines and only my machine was at fault. The next weekend I hit another royal on the same machine and the it forced a hand pay. While waiting for an attendant the slot manager stopped by asking if I was waiting long to get paid. The attendant had already got my information so I replied that all was going well. I related to him that I reported the failed hand pay the previous weekend. He thanked me and replied that only the casino was responsible for the legal paperwork for the hand pay. Of course he was not a I.R.S. representative interpreting the rule but he was as close as I got to the bottom line. Close enough. And your response referenced that this occurred in Illinois. This is a federal regulation so I would think the responsibility is nationwide.

Deke Castleman Feb-03-2025

This is from Dave via email

It seems like today's questioner was concerned as to whether he’s responsible at all if the casino fails to issue a W-2G.  The answer is, he’s not. I’m a CPA; as he was told by the slot manager, only the casino is responsible for issuing the W-2G and they’d be subject to a small penalty for not doing so. But the player has no responsibility whatsoever other than, as you correctly point out, to report his winnings on his tax return, whether he receives a W-2G or not.

Lotel Feb-03-2025

Take the money and run

I would have cashed it and gone home

AL Feb-03-2025

An exception

As I reported to my Internet group a couple/few years ago when I was very low income and my main source of income was Social Security, which was not taxable by either Federal or State, if your total taxable income (after including the $4,000) will be under a certain number threshold (something like $10,000 or $11,000), then you don't have to report it to the IRS, because you don't owe any federal income tax.  I found that out in a weird way: I tried to file a tax return simply because I thought I had to; I tried to do it online, but the online computer system wouldn't/couldn't do it.  I wound up visiting the local IRS office and the guy told me that the reason why the system wouldn't process my attempted tax return was because I didn't owe any taxes; and he explained why, as I listed above.  The exact number appears to change each year, so I can't state it here and now, but if you're still under it after including the $4K, then you don't have to report it or file a return.

Question of the Day - 03 February 2025

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