Pa Slot Tax Rate

After the thrill of collecting gambling winnings, comes questions about taxes.

Yes, gambling income, which includes winnings from slots, table games, horse racing, sports betting, lottery games, jackpots, and the like, is considered taxable income. As such, you are required to report them on your tax return. The car, boat, or Harley Davidson and other noncash prizes also need to be reported.

As regulated US iGaming interests prepare to launch their offerings to the Keystone State market — perhaps as early as this year — here is a look at the 54 percent effective slot revenue tax rate that internet casino operators will be responsible for paying to various statewide interests. A closer look at the PA tax rate. Pennsylvania, which collected $1.1 billion in taxes last year compared to $1.4 billion in 2019, assesses a tax rate on slot machines at most casinos at about 52%, which includes 34% state tax, 2% local share assessment, 6% for the Economic Development Trust Fund, and about 10% for the Pennsylvania Race Horse Development Fund.

There are plenty of questions surrounding Pennsylvania taxes and gambling winnings. Now there are even more with the advent of sports betting, betting apps, and online casinos in Pennsylvania.

Here are some answers.

Pennsylvania taxes slots at more than 50 percent and is considering a tax rate of 15 to 20 percent on online gambling. That’s the reason for the cannibalization concerns. But in Atlantic City, the reverse is true. Land-based casino revenue is taxed at 9.25 percent, while online gambling revenue is taxed at 17.5 percent. In 2018, the top tax rate was lowered from 39.6 percent to 37 percent. That means you would pay less in taxes this year if you won. Additionally, the new $10,000 limit on deducting state and local taxes restricts the amount of state taxes you could write off in future years.

How much are my gambling winnings taxed?

Casinos withhold 25% of winnings for those who provide a Social Security number. If you do not provide your Social Security number, the payer may withhold 28%.

Currently, Pennsylvania’s personal income tax is a flat tax rate of 3.07% which applies to all taxable income, including gambling and lottery winnings. PA has the lowest rate of all states with a flat tax.

The new regular withholding rate

Effective for taxable years beginning after December 31, 2017, the withholding rate under Section 3402(q) applicable to winnings of $5,000 or more from sweepstakes, wagering pools, certain parimutuel pools, jai alai, and lotteries (formerly 25%) is 24%.

Federal Form W-2G, Certain Gambling Winnings

The organization that pays the winnings, in most cases, the casino, is responsible for sending the recipient of the winnings Form W-2G, Certain Gambling Winnings.

Form W-2G reports the amount of winnings to you as well as to the IRS.

The payer is required to send Form W2G only if the winner reaches the following thresholds:

• The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
• The winnings (reduced by the wager) are $1,500 or more from a keno game
• The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
  • $600 or more, and
  • At least 300 times the amount of the wager
• The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

How to report PA gambling winnings on taxes

According to the IRS, you must report the full amount of your gambling winnings each year on your federal taxes. First, you report gambling winnings as

You may receive a Form W-2G showing the amount of your gambling winnings and any tax withheld. Include the amount from box 1 as “Other Income” on Form 1040, Schedule 1 (PDF).

That number then goes on your U.S. Individual Income Tax ReturnForm 1040 (PDF), line 7a (designated “Other Income”). You should attach the Schedule 1 form to your Form 1040.

Include the amount shown in box 2 on the W-2G on line 17 (designated as federal income tax withheld) of your Income Tax Return (Form 1040).

Pennsylvania state taxes for gambling

In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income.

You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Include the total winnings from line 6 of Schedule T on your Pennsylvania Income Tax ReturnPA-40 (PDF), line 8 (“Gambling and Lottery Winnings”).

If your gambling winnings come during a trip to another state or country, you are still required to report.

Michelle Malloy, Esq. at AUA Capital Management, LLC in Conshohocken, Pennsylvania, commented:

“Pennsylvania takes the position that they are entitled to tax a portion of your worldwide income based on certain income items (wages, interests, dividends, capital gains, gambling winnings, lottery winnings, etc).”

What if I don’t receive a Form W2-G?

If you did not receive Form W-2G, your winnings are still considered taxable income and should be reported. A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding.

According to Malloy:

“You are required to report all gambling winnings for federal and Pennsylvania taxes. If you hit a certain threshold they (the casino) will withhold money. In the instance where a casino doesn’t do their job and and fails to send you a W2-G you are still required to report your winnings, or you run the risk of underreporting your taxable income for the year.”

Do I have to pay taxes if a group of people win the lottery?

What happens when a group of coworkers chip in on a lottery ticket that wins? What about you and a friend who put money on a long-shot team to win the championship?

Meet Form 5754 (PDF). Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings.

Don’t send Form 5754 to the IRS. Keep a copy for your records and return the form to the payer (usually the casino) for preparation of Form W-2G for each person listed as winners.

Are there any deductions available for taxes related to gambling?

Gambling losses can be deducted. However, they must be itemized on line 28 of Schedule A, Form 1040.

Also, you cannot deduct more than your winnings.

Expenses related to any gambling or lottery activities, (like your dinner at the steakhouse, celebratory drinks from the bar, or cost of hotel room) cannot be deducted.

If you are going to deduct gambling losses, keep these records:

• The date and type of each wager
• The name and location of the bet
• The amount won or lost
• Wagering tickets
• Canceled checks
• Credit card records

When using a players club/members card, casinos can track players’ spend. Therefore, you can request a win/loss report that will give you a fairly good sense of your activity in a casino. Online casino players can request the same report and most sites should be able to provide it without issue.

“A lot of people may under-report,” explained Malloy. “They might win $10,000 but have $3,000 of expenses so they think they are just going to report $7,000. That can be an issue, as Pennsylvania does not allow a deduction for expenses. If you win a lot of money in June, for example, you might want to make an estimated tax payment [due Sept. 15 and Jan. 15] so you don’t have an underpayment penalty the following April.”

How to claim gambling winnings and/or losses

Pennsylvania provides a helpful resource to determine how to claim gambling winnings and/or losses.

There is a prompt where you can start a ten-minute interview.

Be sure to have the following information ready:

• Your and your spouse’s filing status
• Amount of your gambling winnings and losses
• Any information provided to you on a Form W-2G

Taxes on multistate lotteries

The Pennsylvania Department of Revenue considers multi-state lottery prizes, like those from Powerball and Mega Millions, awarded on tickets purchased through a licensed Pennsylvania state lottery ticket vendor, a prize by the Pennsylvania Lottery.

“Such prizes are considered Pennsylvania source income and both residents and nonresidents are subject to tax on such income if the prize is a cash prize. Multistate lottery prizes awarded on tickets purchased through a vendor in another state lottery are considered prizes awarded by that state lottery. Such prizes are not considered Pennsylvania source income and only residents are taxed on such income regardless of whether the prize is a cash or noncash prize.”

Due to a 2016 law change, any cash prize won from a Powerball of Mega Millions ticket in any state is taxable for state purposes, in addition to federal taxes.

What happens if you win a few thousand dollars on a winning PA lottery ticket?

Lottery winnings are included in taxable income. Pennsylvania Lottery winners of an individual prize valued at more than $600 will receive a Form W2-G by mail.

If your spouse also wins, they must report their winnings separately.

“For a significant windfall, like over $5 million, it definitely makes sense to talk to an attorney or accountant to determine if they should take a lump sum payout or annuity. They may also need to think about estate tax planning, financial planning and/or asset protection planning for their windfall,” said Malloy.

Sports betting winnings and taxes

Sports betting winnings are taxable income.

The IRS states:

“Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”

Even though sports betting isn’t specifically listed, it falls under the umbrella of “gambling winnings.”

Wherever your sports betting win occurred – at the OTB, the casino, on a sports betting app – they payer should send Form W-2G.

Sports betting losses might also be used as deductions if you itemize your deductions and keep a detailed record of wins and losses.

Based on your tax bracket, sports bettors in Pennsylvania could owe up to 35 % of winnings to the federal government in addition to the 3.07 % Pennsylvania taxes net gambling winnings.

Online gambling and taxes

Sports betting apps and online casinos provide unmatched convenience. You may also enjoy the anonymity of playing behind a screen name instead of in person. However, it still comes with the same tax responsibilities. Online gambling winnings are considered taxable income at the same rate as other gambling winnings.

For online gambling winnings, the payer is required to send Form W2G only if the winner reaches the following thresholds:

• The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
• The winnings (reduced by the wager) are $1,500 or more from a keno game
• The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
  • $600 or more, and
  • At least 300 times the amount of the wager
• The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

In terms of deductions for taxes, players can request a report from online casinos detailing wins and losses.

Regulated Casino, Poker and Gambling Sites in Pennsylvania

PA online casinos are flourishing in 2021. Pennsylvania recently overtook New Jersey in terms of casino revenue – taking second place behind Nevada.

This guide covers everything you need to about online casinos in PA, gambling online and PA poker sites.

2020 is shaping up to be a busy year in the Keystone state, with close to a dozen gambling sites available. There are multiple sites to choose from in Pennsylvania, including, poker, casino and sports betting.

This guide walks you through the best PA casino apps, including bonus offers available and how to choose a site that works for you.

Best Online Casinos in PA

Pa Slot Tax Rates

Here is what you’ll find in this detailed Pennsylvania online gambling guide:

• Legal Overview: Recent law changes and current news
• Online Casinos in PA: The partnerships we know about so far
• Sports Betting Sites in PA: Betting on sports online
• PA Poker Sites: Partnerships and the possibility of shared player pools
• What to Look for: What makes one online casino better than another?
• Gaming Options: Slots, table games, live dealer options and online poker are all covered here.
• PA Online Gambling FAQ: Everything players need to know before heading online
• The Road to Regulation in PA: History and timeline of the legislative efforts

PA Gambling Sites Overview: What’s New?

2021 will be a busy year for Pennsylvania. With both real money PA casinos and poker sites already online, you can expect new games, new promotions and new operators to expand in the Keystone State.

The initial licenses are awarded to holders of existing gaming licenses (brick and mortar casinos). A second batch awarded to ‘qualifying gaming organizations’ bringing increased choice for players further down the line.

Many big brand names including Scientific Games and PokerStars have already found partners – and have launched. While some live casinos declined to move online (for example Sands Bethlehem), other big names including Harrah’s Casino and Mohegan Sun are all posed to make this move.

Sports betting is live in PA live casinos, following New Jersey’s victory at the Supreme Court. Licenses have since been issued for a number of sites and many have launched in 2019 with more expected come 2020.

Slots are taxed differently to table games and poker in PA. With a 54% tax on gross gaming revenues, these games will not be as profitable for the casinos as in other states. This high tax rate also applies to slots at existing B&M casinos – and help make PA the state with the highest tax take from casinos, even beating out Nevada.

PA Online Casinos

Most of the license holders have formed technology partnerships already. Big international brands and equivalents gave some clues as to what players could expect with Pennsylvania online gambling sites. The first casino to go online was Sugarhouse, followed by Parx, BetRivers and Hollywood Casino.

Here is a list of online casinos in PA and known partnerships to date:

• BetAmerica – Presque Isle Downs
• BetRivers – Rivers Philadelphia
• BetMGM – Hollywood Casino
• Caesars Online Casino – Harrah’s Philadelphia
• DraftKings Casino – Hollywood Casino
• FanDuel Casino – Valley Forge
• PokerStars Casino – Mount Airy
• Unibet – Mohegan Sun Pocono
• SugarHouse Online Casino – SugarHouse

Pennsylvania Online Casino Bonus Guide

With the online casinos in PA open, players have a unique opportunity. The brands (and their partner land-based casinos) are keen to get a great start. This means bonuses and promotions for new players should be both generous and easy to come by.

You’ll find the best PA online casino bonus codes here along with some pointers of the types of bonus and promo deals to expect – and how to take advantage of each one.

• Free Play Bonuses: Over in New Jersey, all NJ online casinos offer new players free play on real money games without the need to deposit. This is money is placed in a bonus account – and can’t simply be withdrawn. You can keep what you win with it, subject to a play-through requirement (and at some casinos a deposit). PA internet casinos are also offering no deposit offers, however, its few and far between.
• Matched Welcome Bonuses: As well as showcasing games with free-play, Pennsylvania online casinos will be keen to encourage deposits. To do this, matched bonuses are on offer. A typical casino deal is 100% matched to your first deposit, up to $500 (sometimes more). You’ll then need to wager this bonus money a number of times before it can be withdrawn.
• Other Deposit Deals: Some casinos in Pennsylvania offer extras along with your deposit. This can be entry into a slot tournament, a free chip for live-dealer casino games or free slot spins.
• Reload Bonuses: You might need to top up your account at times, and casinos are keen that you stay with them instead of seeking a fresh welcome bonus elsewhere. You’ll find reload bonuses similar to your matched welcome offers, with a percentage match and play-through requirement. Remember to check for these if you decide to reload, that simple casino bonus code can make a big difference to your bankroll!
• Comp / Loyalty Schemes: These work in a similar way to schemes at live casinos. You get points based on your play. Instead of swapping them for drinks, you’ll get extra bonuses online instead.

One significant type of casino bonus you can expect from PA gambling sites is one-off and special promos. These can be tied to holidays, sporting events like the Super Bowl or sometimes just new slot games. A solid number of one-off promos shows that a casino is serious about looking after their regular players, and not just attracting new ones.

PA Sportsbooks & Online Betting Sites

At the time of writing, over half a dozen live casinos have applied for online sports betting licenses. Mid 2019 saw Sugar House become the first PA sports betting site, albeit with a soft-launch. Since then, Fanduel, FoxBet Bet Rivers and Unibet PA have launched.

Pa Slot Tax Rate

The other casinos that launched PA sports betting sites in 2020 include:

1. BetMGM via Penn National – Coming 2021
2. Harrah’s via Caesar’s Sportsbook – Launched March of 2020
3. Hollywood Casino via Barstool Sportsbook – Launched September of 2020
4. Presque Isle via BetAmerica Sportsbook – Launched December of 2019
5. Valley Forge via FanDuel Sportsbook – Launched July of 2019
6. Meadowlands Race and Casino via DraftKings Sportsbook – Launched November of 2019
7. Mohegan Sun Pocono via Unibet Sportsbook – Launched November of 2019
8. Mount Airy Casino via Fox Bet Sportsbook – Launched September of 2019
9. Rivers Pittsburgh via BetRivers Sportsbook – Launched June of 2019

PA Online Poker Sites

Poker relies on a larger number of players to offer bigger prize tournaments and a wider choice of games / formats. It was assumed that a link-up would happen, though the recent reassessment of the opinion on the Wire Act has now bought this into question.

PA has a big enough population (12.8 million) to make online poker viable alone – though the benefits to players of the extended player pool would be considerable.

Giant brands including 888 and Party Poker PA are preparing to enter PA, while PokerStars PA has already launched.

PokerStars was the first online poker site in Pennsylvania to go live and is partnered with Mount Airy Casino.

Here are the rest of the sites and partnerships announced so far:

• Harrah’s:888 Poker
• Hollywood: IGT
• Parx: GAN / Kambi
• Valley Forge: Party Poker
• Sugar House: Rush Street Interactive

What to Look for with PA Online Gambling?

With so many options available, choosing the best PA online gambling site might not be easy. This section draws on years of casino, poker and sportsbook experience to bring you the key things to look out for before you sign-up.

For casino fans, the software, games, bonuses and live-dealer options all come into play. Casino site software has come on a long way since the big brands left the US back in 2006. This is now responsive to your screen size, with animations and 3D effects which will blow you away.

In the past, casinos required you download a software package onto your PC. These days, your choices are mostly browser-based – with some smartphone apps.

Instead of games from a single software provider, casinos curate their own choice of slots, table games and novelty titles. You’ll find games from giants like SG and IGT alongside titles from new and innovative software houses. I recommend you try out casinos (with free no-deposit money where possible) to find the game selection and software that you like best.

Poker fans will also have some choices to make. While a lot depends on whether player pools are shared or PA-only – there are differences between the games and formats each site offers. With poker, size matters. While you might prefer software on one site, if all the opponents (particularly the recreational ones) are playing elsewhere, then it makes sense to switch. As well as welcome bonuses, ongoing offers make a big difference to your bottom line in poker games. The best PA poker site will combine a lot of players, a great selection of games and regular reward.

Finally, sports bettors will know that the lines on offer at PA sports betting sites are more important than the software client. That is not to say bad sportsbook software should be tolerated! This area is one where having a choice of site (and the ability to shop for the best lines each time you bet) is more important than a long list of features or gimmicks.

What Casino Games Are Available to PA Residents?

The choice of slots online these days will come as a pleasant surprise to many new players. You can enjoy online versions of slots from live casinos (including many movie and TV show themed games). You will find the depth of game-play in online-only slot titles has significantly improved. Increased competition from smaller software houses, combined with classics from the likes of Bally, IGT and others will give you a huge choice.

If you prefer your slot play more traditional, then you’ll be happy to know 3-reel slots – which mimic the original mechanical machines – are also widely available. Many PA online slots have huge (million+) jackpots these days too.

Table games can be played via casino software, or with live dealer via a real-time video link. Live dealer games are hugely popular – adding a social element to online casino gambling. You’ll find plenty of options including blackjack, roulette, baccarat and casino poker variants. Software based table games give you even more choices including many innovative side-bets and rules variations.

Between table games and slots, you’ll already have 1000’s of games to choose from. Add in video poker, keno, scratch-cards and novelty games – and your choices get even better.

Other states with legal online gambling

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PA Online Gambling: The Road to Regulation

Like many East coast states, Horse Racing, and the gambling associated with them, were popular as far back as the 1830’s. A lottery and limited charity gambling options were all that was available for a long stretch – until 2004.

In that year ‘Act 71’ was passed, legalizing live casinos and betting at horse racing tracks. These forms of gambling would become a big source of income for the state coffers. High tax rates (particularly on slot and casino gaming), meant that more tax revenue came from gambling in PA than in any other state in 2018. This includes Nevada, where the revenues are higher – though tax rate is significantly lower.

On Oct. 25, 2017, the Pennsylvania Senate passed a comprehensive gaming expansion package that includes online gambling in the form of online poker, online slots, as well as online table games. The next day, the PA House passed the bill as well, making Pennsylvania the fourth state in the nation to authorize online gambling.

The package then went to Gov. Tom Wolf, who signed the bill on Oct. 30, 2017, officially cementing PA’s status as the fourth US state to legalize online gaming.

The legislation, H 271, permits a variety of other gambling expansions, including daily fantasy sports, sports betting both online and off (should the federal government repeal PASPA), video gaming terminals (VGTs) in authorized truck stops, and tablet gaming at qualified airport locations.

Now that Wolf signed the bill into law, it will likely be around nine months before the first legal online gambling sites launch in Pennsylvania. Regulations will need to be promulgated, licenses issued, sites tested, and so forth.

When legal NJ online gambling was passed, it was roughly nine months before sites went live.

Pennsylvania has surpassed their first year of online gambling and in that year they saw half a dozen sportsbooks go online, one poker site and four casinos. More are expected to rollout over the course of 2020.