What Will Casinos Do?

I’ve written a few times that starting January 1, 2026, the tax law will be changed drastically for professional gamblers — especially those who get W-2Gs or have a significant paper trail, such as those who bet big amounts in sportsbooks or play in large casino tournaments of any kind.

Blackjack players and poker players who don’t play in tournaments have largely been on the “honor system” to report their wins and losses. These players can apply a “fudge factor” to their scores and generally be all right, despite the new tax law. 

I’m neither suggesting nor condoning they do this, nor am I happy with the fact that they can do this to their taxes and I can’t, but I’m sure it will be done in several cases.

Players who receive W-2Gs and the casinos which send this information to the IRS are hard pressed to find a way around the extra tax. While the IRS threshold for issuing a W-2G is said to be increasing from $1,200 to $2,500 or some other number, and maybe 1099s also (nobody is too sure), these will have a minor effect. A large percentage of W-2Gs are for bigger amounts.

If you’re a big sports bettor with one of the major U.S. books, each sportsbook can report your wins and losses there to the IRS. Whether they will or not, I’m not too sure. My sports betting is very “small time,” and I don’t know how these books treat their bigger customers.

I, for one, announced a few months ago that I will quit gambling on January 1, 2026. Nothing has changed in the meantime to make me change my mind. How many other players will quit, or at least cut back drastically, is an open question. I have no way to estimate how much business in high limit slot rooms will evaporate, but I believe it will be a significant percentage.

There will be players who don’t know about the new law, or don’t think it will apply to them, or basically don’t care. While the profit motive is a major reason I gamble, and when the profit disappears, I disappear, many gamblers don’t care all that much about that. They want to win, but expect to lose, and if it turns out to be an extra $250,000 lost, well that’s too bad. No big for them, perhaps, but it would be for me and most others.

Some though, will put up with the extra loss for one year, and decide they can’t do it anymore, and by calendar 2027, the high limit slot rooms will be largely empty. We’ll see.

I expect casinos to come up with dollar video poker games where the royal flush returns $2,495. We’ve seen “tax free” quarter royals for $1,199, for the same purpose. Or maybe $5 games requiring three or four coins. You still get a W-2G for a royal, but you won’t for most 4-of-a-kinds.

If casinos lose a lot of their high limit slot revenue, you can assume they will tighten up pay schedules and promotions to make up for it. What they’ll actually do is unknown. But my prediction is that most readers of my writings will not like it.