The prospect of raising the Internal Revenue Service threshold for reporting slot payouts looks “better than ever,” an American Gaming Association executive said Friday.
“We have a strong case (and) a growing base of support,” said Chris Cylke, AGA’s senior vice president of government relations, citing the expansion of legal gaming throughout the country.
He spoke with CDC Gaming after moderating the association’s first G2E Insider Live webinar, titled “The Post-election Landscape and Implications for Gaming.”
AGA SVP Chris Cylke
On the panel for Thursday’s panel were:
- Aurene Martin, president of Spirit Rock Consulting of Alexandria, Va., the country’s largest Native American-owned lobbying firm. She is a former assistant secretary for Indian Affairs in the Interior Department.
- Phil Cox, founding partner of 50 State, a bipartisan consulting firm based in Washington, D.C., and focusing on state governments. He is a former executive director of the Republican Governors Association.
- Todd Webster, principal of Cornerstone, a government relations firm based in Washington, D.C. He is a former chief of staff for U.S. Sen. Chris Coons, D-Del.
- Eric Zulkosky, of Fierce Government Relations, an all-Republican lobbying firm whose clients include the AGA. He once was director of member services and policy advisor for U.S. Rep. Steve Scalise, R-La., then House majority whip.
Casino operators and the AGA have argued for years that the slot reporting threshold is outdated, increases business costs, and frustrates customers. Any slot win of at least $1,200 – a threshold in force since 1977 – requires the machine to be shut down while the casino and player complete IRS paperwork.
“It’s anachronistic,” Webster said. “I can’t think of any other machine that’s taken out of service to comply with the IRS. That’s a penalty we’ll be hard at work trying to fix.”
Cylke, Webster, and Zulkosky all mentioned a House-approved provision that would direct the Treasury Department to review the threshold and report back to Congress within 90 days. They expect that to be part of a spending measure eventually passed by both House and Senate.
“We’re optimistic,” Cylke said. “It’ll give us a running clock for Treasury … and give us a good foot in the door to engage the incoming administration about this issue.”
Cylke said the Treasury Department, in consultation with the IRS, would decide whether to raise the threshold. The AGA has suggested making it $5,000.
Zulkosky said the slot threshold provision probably will be part of “must-pass” legislation, making it a helpful vehicle to advocate for reform.
Cox said the COVID-19 pandemic, which forced the temporary closure of all casinos and many other businesses, and its economic fallout have squeezed state budgets throughout the country. Nevada and New Jersey are among those that depleted their rainy-day funds.
Besides “yelling and screaming from the rooftops” for federal aid, he said states are looking for new revenue sources. For most, the choices are legalizing marijuana and expanding gaming.
Two dozen states will consider sports betting legislation in 2021, and about half are likely to approve it, he predicted. Texas will consider online sports betting, but the proposal faces stiff opposition in the state Senate, Cox said.
At the state level, the big election year will be 2022, with 36 gubernatorial races, including open-seat contests in Pennsylvania, Arizona, and Maryland, Cox said.
“We could see as many as 10 to 15 (new) administrations in the next two years, and that’s something for this industry to keep a close eye on,” he said.
Martin said most Native Americans supported President-elect Joe Biden because of tribal policies and the chance for a “return to normalcy.” She said a pending leadership change on the U.S. Senate’s Indian Affairs Committee will lead to more activity on tribal issues, including COVID-19 relief.
“Tribes would like for (online sports betting) to be considered tribal gaming and for the servers to be hosted on their land,” she said. She said a new version of a House bill on tribal sports betting is likely.
Zulkosky said the narrow party margins in both the House and Senate will require compromise for action on major issues.
“That dynamic could be really exciting and could mean really big things in the next year,” he added.
Webster said Biden will pursue a moderate agenda, with top two priorities of addressing the pandemic and economic recovery. That would include another “robust” COVID-19 relief package and rebuilding of infrastructure. Biden’s next priorities will be addressing racial equity and climate change, Webster said.
“Don’t expect anything terribly radical,” he said. “You will see a more conventional administration than what you’ve seen over the past four years.”
