WASHINGTON — Win $1,200 at a slot machine and the action stops until the casino gathers your name, address and Social Security number for the Internal Revenue Service to guarantee you'll pay taxes on that money.
Now the IRS is considering reducing that threshold to $600, which to the casino industry means more interruptions in play and a subsequent loss of revenue from machines taken out of action and players unable to gamble until the forms are filled out.
"That's time a casino isn't earning revenue and as a result the state isn't earning revenue," said Christopher Moyer, a spokesman for the Washington-based American Gaming Association, which represents Atlantic City's casino owners.
As a result, the trade association, whose members include Boyd Gaming and Caesars Entertainment. argues that the IRS is dealing a losing hand to the industry.
"Lowering the reporting threshold on gaming winnings is a major mistake," said Geoff Freeman, president and chief executive officer of the group. "To cut the threshold in half will cause burdensome unnecessary paperwork and will severely undermine the customer experience."
The provision is mentioned in a proposed IRS rule that would take advantage of new technologies like players' cards that automatically record play in order to more accurately track payouts from casinos to their winning customers. The rule would cover slots, keno and bingo.
The agency "may propose to reduce those thresholds at a future time," the notice said, "Comments are specifically requested regarding the proposed reporting thresholds, including the feasibility of reducing those thresholds to $600 at a future time." The $600 is the reporting threshold for payments at horse and dog tracks and jai alai on a $2 bet.
The casino industry spent $34 million to lobby last year, according to the Center for Responsive Politics, a Washington-based research group. Freeman, who spoke with reporters on a conference call today, said his association has told the administration and Congress of its objections to lowering the thresholds, which he called an attempt to find more tax revenue.
"They're aware of the concerns that we have," he said.
Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him on Twitter @JDSalant. Find NJ.com Politics on Facebook.