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Deal Me In

Friday
Nov282014

Who watches them? Them being the casino

Dear Mark: I know that you have clearly stated multiple times in your column that casinos do not cheat. I am still leery of your belief. I guess my question is, who monitors the casino that their slot machines are on the up and up? Jared J.

 

Every state that offers land-based casinos has some form of a gaming regulatory agency that provides you, the casino patron, with protection from playing on a rigged machine.

Let’s begin with the machine itself. Each new slot machine goes through roughly a six-month process to be approved before it hits the casino floor.

A state’s gaming regulatory agency tests the machine to make sure that it operates randomly by scrutinizing how it selects the reel stops on a slot machine, does a thorough inspection of its source code for any possible problems, and then peeks at the principles behind how the random generation occurs. Only then is the machine placed out in the field (casino) for more testing before final approval.

After the proverbial two thumbs up, the manufacturer can then sell that configuration of that slot machine to the casino. Testing then continues once the machine is placed into operation.

For starter’s, the machine will run self-tests to make sure it hasn't been tampered with, plus make sure they run within certain parameters, meaning, it doesn’t pay out too little, or too much. These internal tests also look out for the casino’s best interest in that they make sure the slot machine isn’t susceptible to cheating.

In most (if not all) states, machines are also subject to random spot checks in which someone from gaming verifies that a machine is identical to the approved configuration, has not been tampered with, and the chips in the machine match the reference chips approved by the agency.

Agents in the field show up unannounced and armed with a laptop computer that has a database of all the chip signatures. Each chip has a code number that contains all its attributes, including its return percentages. Agents will know on the spot if the chip is legit by inserting the chip into their specialized laptop; it reads the chip and all its contents to certify that it is an approved value chip. Any hanky panky (Tommy James and the Shondells, 1966), and we’re talking the possible loss of a gaming license. Besides, most casinos today are publicly-traded companies not interested in exposing their gaming license to loss with any suspicion of monkey business going on.

Furthermore, in some states, casinos can't even access the logic boards in their machines. Only the gaming authority can either make the change or to witness the swap.

Some states do allow casinos to make variations to slot machines under that state’s regulations. By variations, I mean either a paytable modification or a chip swap inside a machine to make it return more or less. As long as “approved” chips are used, and the payback is within the minimum limit set by each state’s law, it is legit.

Another reason the slot machine is on the up-and-up is that every machine offered is mathematically in the casino's favor. It is the way they make their moola, by paying you less than the true odds on every machine on the casino floor. Why cheat? There isn’t any need to swindle you beyond what the state already allows them via the casino hold. They don’t call them One-Armed Bandits for nothin’.

Please take into account, Jared, that my above answer is to some degree generalized. Each gaming jurisdiction may use a slightly different approach, but you can rest assured that who’s watching who is watching out for you.

 

Gambling Wisdom of the Week: “Slot machines are the cotton candy and the McDonald's of the casino. Everyone knows that they're bad for you, but few can resist their junk-food appeal.” – Andrew Brisman

Thursday
Nov202014

Plan on a long dry spell between top-line jackpots

Dear Mark: Can you explain to me why I no longer get anywhere near the number of top slot jackpots that I once got in the past? Sandra R.

 

By past, Sandra, I am assuming that your slot play consisted of the “old style” reel machines. Those machines had physical limitations as to the number of reels and stops per reel, which created a limited number of possible outcomes. That total number, often referred to as a slot cycle, can be in the tens of thousands on a three-reel machine. Today’s multi-line slot machines have no physical limitations, creating slot cycles in the tens of millions.

So, Sandra, what this means is that when playing multi-line games, there is less volatility, which equates to additional smaller jackpots, but the chances of hitting a top-line jackpot are greatly decreased.

 

Dear Mark: On the video poker game Triple Bonus Plus, four aces, when 5 dollars are played, is worth $1,200. Since this is the threshold for IRS purposes, wouldn't it make much more sense to reduce it by a dollar and make it $1,199? The people I have talked to about this stand in agreement with me. The game would have fewer delays, and gamblers would have fewer W-2G statements each year. Bobby F.

 

I stand with you, Bobby. The $1,200 threshold needs to be adjusted, considerably upwards.

For decades now, it sits pat at $1,200. Dollar players usually have that much invested in a slot machine before they hit anything sizable, and then they have to pay taxes on top of that, which ends up creating a loss on those four Aces you mentioned.

Yes, making those jackpot wins at $1,199 would stop those mandatory W-2G tax forms required by IRS regulations. Better yet, Bobby, based on the value of today’s dollar versus yesteryear, $5,000 - $10,000 would be a more applicable figure to initiate IRS paperwork. Will the IRS make my suggested change to alleviate work for the casino and give the grinding player a break? Don’t bet on it!

As for you stating “gamblers having fewer W2-G’s,” unfortunately, this does not mean they are off the hook from paying taxes on a $1,199 win. Taxes are due on all wins regardless of whether you are issued a W2-G or not. The set point of $1,200 only ensures that at least some gamblers are forced to declare some of their winnings.

Mentioning the difference between tax avoidance and tax evasion might be appropriate here. Tax avoidance is the legal use of tax laws to reduce one's tax burden. In the eyes of the IRS, failure to report a $1,199 jackpot is escaping payment by illegal means, or better stated, tax evasion. Just sayin’.

Your tax liability is between you and the IRS. This columnist is not going to offer up a cavalier, “oh, fuggedaboutit; you won’t get caught” recommendation. Instead, Bobby, I suggest you should keep an accurate diary of your gambling winnings and losses for income tax reporting purposes.

Revenue Procedures 77-29 require that the taxpayer maintain an accurate diary that supports evidence of both wins and losses. Make sure your diary includes the type of gambling activity, location, and a statement of the amount won and lost. As well, Bobby, with slot machine play, be sure to keep the time, date, and a slot machine number.

 

Gambling Wisdom of the Week: “At gambling, the deadly sin is to mistake bad play for bad luck.” – Ian Fleming Casino Royale (1953)