Welcome Guest
Log In | Register )
You last visited December 7, 2016, 4:45 am
All times shown are
Eastern Time (GMT-5:00)

Audit: Stores buying Michigan lottery tickets from players

Topic closed. 41 replies. Last post 2 years ago by Stack47.

Page 3 of 3
32
PrintE-mailLink
LottoMetro's avatar - Lottery-024.jpg
Happyland
United States
Member #146344
September 1, 2013
1129 Posts
Offline
Posted: November 21, 2014, 1:14 pm - IP Logged

I did read the "rest of your post"and started wondering if we're discussing the same thing. If the average prize is about $3000, Federal law requires the Michigan Lottery to issue a W2-G for prizes over $600. In Michigan players with winning tickets valued $601 to $50,000 must go to a regional office, lottery headquarters, or a designated bank in the Northern part of the state and the Upper Peninsula. If you, me, a lottery retailer, or anybody buys a ticket valued over $601 at a discount, to collect in Michigan (and in every state) we are issued a W2-G.

If the retailers mentioned in the article failed to report the amount on the W2-G on their 1040, the IRS will send them a letter. If they did report the amount on their 1040, it would be part of the state taxable income. The Michigan Lottery won't payoff any ticket valued over $601 without issuing a W2-G.

It doesn't matter how many prizes under $601 any retailer cashes as long as their books balance. Retailers validate those tickets on their terminal and get a reciect showing the transaction, but there is no paper trail showing who collected the winnings because it's not required. Which part of lottery retailers are paid a commission for cashing tickets by the lottery confused the auditors into believing the retailers must pay taxes on all the non-taxable tickets they cashed?

I'm more than willing to give a small list of casinos I gambled in that never required ID at any table in Vegas, AC, Reno, Illinois, Indiana, WVA, Windsor, Ontario, and a few other states that you can check. Instead of saying "visiting them", how about the name and location of those casinos you visited that required ID.

confused the auditors into believing the retailers must pay taxes on all the non-taxable tickets they cashed?

This didn't happen. The auditors said nothing about <$600 prizes. The retailers who discounted reportable tickets did not report all of their reported winnings on their tax forms. That's it, not much more complicated than that. Guess I wasn't clear enough in my responses.

Btw the auditors' report is here: http://www.audgen.michigan.gov/finalpdfs/14_15/r271045013.pdf

You list generic locations but not any specific casinos, yet you expect me to do so? Okay, I'll bite.

Just a few:

  • Sam's Town LA
  • Horseshoe LA
  • DiamondJacks LA
  • Maryland Live MD
  • Horseshoe MD
  • Hollywood MO
  • Rivers IL
  • Grand Vic IL
  • WinStar OK

When was the last time you visited a casino? Doesn't really matter. This isn't a casino forum.

P.S. In response to your below post: Pit bosses will still shake your hand and be sociable, maybe not in Vegas where they are busy but elsewhere they do. Whenever I visit I always get a smile, handshake, first-name basis, joking around, shooting the beans, comps, etc. As CT said it is an ego business

If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the potential payoff does.
If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

2016: -48.28% (13 tickets) ||
P&L % = Total Win($)/Total Wager($) - 1

    Avatar
    Kentucky
    United States
    Member #32652
    February 14, 2006
    7310 Posts
    Offline
    Posted: November 21, 2014, 1:16 pm - IP Logged

    The casinos requiring ID started with Regulation 6A. At first it was for any cash transaction over $10,000. Then the amount changed a few times.

    Go to nvbar.org and do a search for Goodbye 6A Hello BSA.

    As far as asking for personal information the casinos know they are in the ego business as much as the gaming business. The information requests are for marketing so then can send tournament invitations out, etc... ad nauseam.  Every gambler thinks the are a 'good' player and that's what the players' cards and everything are appealing to. Plus the house has to 'justify' comps. Just because someone saw some hype show on A & E and goes to Casesar's and loses $5 on a hand of 21 doesn't mean they've got comps to the better restaurants coming.

    The days of a pit boss only knowing someone as 'Mr. B." and comping them to the best the house had are long over. Now everything is computerized, all departments are supposed to show a profit, and it takes so many points to get any particular comp.

    Everybody agrees that ID is required for cashing large amount of chips at the cage, but I asked if you as a Craps dealer was required to ask every player for ID before they could make a bet as Metro is suggesting.

    The Resorts in AC began using "hosts" instead of pit bosses to comp their players in the 80s though the tables tracked the play. In some of the smaller casinos, bosses wear two hats and basically are still doing the same job bosses did "back in the day". Today most of the large corporation casinos use the same player card in all their locations. Comps are usually based on overall play and players can collect whatever rewards they earned by swiping their card at the buffet cashier or on a slot machine. Rated players get a casino host, but the process is about the same.

    I miss the days of pit bosses shaking my hand and asking if I had a nice flight. It just seemed more personal to me; like they wanted to gamble with me.

      Avatar
      Kentucky
      United States
      Member #32652
      February 14, 2006
      7310 Posts
      Offline
      Posted: November 21, 2014, 2:15 pm - IP Logged

      confused the auditors into believing the retailers must pay taxes on all the non-taxable tickets they cashed?

      This didn't happen. The auditors said nothing about <$600 prizes. The retailers who discounted reportable tickets did not report all of their reported winnings on their tax forms. That's it, not much more complicated than that. Guess I wasn't clear enough in my responses.

      Btw the auditors' report is here: http://www.audgen.michigan.gov/finalpdfs/14_15/r271045013.pdf

      You list generic locations but not any specific casinos, yet you expect me to do so? Okay, I'll bite.

      Just a few:

      • Sam's Town LA
      • Horseshoe LA
      • DiamondJacks LA
      • Maryland Live MD
      • Horseshoe MD
      • Hollywood MO
      • Rivers IL
      • Grand Vic IL
      • WinStar OK

      When was the last time you visited a casino? Doesn't really matter. This isn't a casino forum.

      P.S. In response to your below post: Pit bosses will still shake your hand and be sociable, maybe not in Vegas where they are busy but elsewhere they do. Whenever I visit I always get a smile, handshake, first-name basis, joking around, shooting the beans, comps, etc. As CT said it is an ego business

      You keep saying the retailers didn't report their winnings, but their winnings were reported to the IRS on a W2-G when they cashed the tickets. It's pretty obvious some didn't buy all the tickets just based on the volume, but it doesn't prove they bought them at a discount so someone could avoid back taxes, child support or whatever.

      And you're correct, it's not complicated because there is no W2-G issue on tickets valued undered $601 and without a paper trail impossible for the Michigan auditors to know who collected the winnngs. I can understand why it seems so complicated after looking at the website. They show the top prize on $1 scratch-offs and the table makes it look like the odds are around 4.75 to 1 to win the top prize.

      The good news is I gambled at Grand Vic several times and as recently as July 2014 when we stopped for a couple of hours. Since I didn't play any table games, I don't know if ID is required for play, but none was required for playing slots. It seems more likely to me that if a players card was required for play, people would be carded before going on the boat with the necessary paper work done outside the boat and not at the tables. It was on a Sunday and judging by the number of players, I seriously doubt two forms of ID including a picture ID was required to play table games. I didn't find any info on their website http://www.grandvictoriacasino.com/about-grand-victoria-casino/#top supporter your claim either.

      When you first mentioned it, I thought you may have visited some of the Missouri boats that had really weird regulations and logical to me that it's possible players cards are required to play. They gave me a boarding pass to get on a boat going nowhere pretending it was a cruise ship.

      My last visit was last week at the Horseshoe in Southern Indiana and even though I have a Platinum Total Rewards card, I'm not required to show it buy chips or to play at any table. The card is actually useless on poker tables because they don't comp poker play. I didn't need the card to play and win slightly over $400 and didn't need it to cash my chips.

      My disagreement was when you said "most casinos", but it doesn't surprise me that a few require ID just to play.

        LottoMetro's avatar - Lottery-024.jpg
        Happyland
        United States
        Member #146344
        September 1, 2013
        1129 Posts
        Offline
        Posted: November 21, 2014, 2:27 pm - IP Logged

        You keep saying the retailers didn't report their winnings, but their winnings were reported to the IRS on a W2-G when they cashed the tickets. It's pretty obvious some didn't buy all the tickets just based on the volume, but it doesn't prove they bought them at a discount so someone could avoid back taxes, child support or whatever.

        And you're correct, it's not complicated because there is no W2-G issue on tickets valued undered $601 and without a paper trail impossible for the Michigan auditors to know who collected the winnngs. I can understand why it seems so complicated after looking at the website. They show the top prize on $1 scratch-offs and the table makes it look like the odds are around 4.75 to 1 to win the top prize.

        The good news is I gambled at Grand Vic several times and as recently as July 2014 when we stopped for a couple of hours. Since I didn't play any table games, I don't know if ID is required for play, but none was required for playing slots. It seems more likely to me that if a players card was required for play, people would be carded before going on the boat with the necessary paper work done outside the boat and not at the tables. It was on a Sunday and judging by the number of players, I seriously doubt two forms of ID including a picture ID was required to play table games. I didn't find any info on their website http://www.grandvictoriacasino.com/about-grand-victoria-casino/#top supporter your claim either.

        When you first mentioned it, I thought you may have visited some of the Missouri boats that had really weird regulations and logical to me that it's possible players cards are required to play. They gave me a boarding pass to get on a boat going nowhere pretending it was a cruise ship.

        My last visit was last week at the Horseshoe in Southern Indiana and even though I have a Platinum Total Rewards card, I'm not required to show it buy chips or to play at any table. The card is actually useless on poker tables because they don't comp poker play. I didn't need the card to play and win slightly over $400 and didn't need it to cash my chips.

        My disagreement was when you said "most casinos", but it doesn't surprise me that a few require ID just to play.

        Yes, the retailer's winnings were reported to the IRS via W2-G as you said. The problem is the retailer's didn't put this W2-G information on their own tax returns. It would be like a casino issuing you a form with the information you are "supposed" to put on your tax return, but you ignore it.

        Like I said, they had ongoing investigations into discounters and that's why they suspected them. It wasn't until after further digging that they discovered the issue was much more widespread than their original investigations implied. It's kinda obvious when store owners have the most wins that something is going on.

        Re casinos, something that may also influence card requirements is age and ethnicity, but usually that only applies at the door. I will backtrack here and say that I have never been required to insert an ID or player's card into a slot machine. I have always had my card(s) swiped before entering the casino, but if I went straight to slots nobody would take my card. But in all the times and places where I have played at the tables, the host/boss would come over and immediately collect it before/while they would let me buy in. As I said, I can't speak for everywhere because I haven't visited everywhere. This was based on my experience with multiple visits at multiple locations. It may be that these casinos have had issues in the past, but it seems like the frequency of this has increased in recent years. Some places are lazier than others, you might get a good 15 minutes of play in before the boss even bothers to come over. I have experienced both uptight and relaxed pits during my play. One boss practically piggybacked my dealer, with another I could've been swiping chips and the boss wouldn't have given a flip because he hated his job and we were having a decent conversation. YMWV

        If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the potential payoff does.
        If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

        2016: -48.28% (13 tickets) ||
        P&L % = Total Win($)/Total Wager($) - 1

          Coin Toss's avatar - shape barbed.jpg
          Zeta Reticuli Star System
          United States
          Member #30470
          January 17, 2006
          10351 Posts
          Offline
          Posted: November 21, 2014, 7:26 pm - IP Logged

          Stack47,

          Atlantic City did a lot to ruin the business and what you described is part of it. And sadly most river boast casinos follow the AC model. the pit bosses are down in the lowest deck of the boat looking at computers and doing paperwork.

          The floor calls down and says some one wants a $5,000 marker and the pit says, "Who is this guy?"

          Sad.

          No dealers don't ask for ID, dealers have enough to do just dealing the game. The floor asks, "Would you like to have your play rated?"

          There's some question here about winnings and taxes. I doubt any lottery player would qualify as a professional gambler, but here goes, from e-file:

          What If I Am a Professional Gambler?

          The rules described on this page are for the majority of people with gambling income, those who are not professional gamblers. If gambling is your actual profession, then your gambling income is generally considered regular earned income and is taxed at your normal effective income tax rate.

          As a self-employed individual, you will need to report your income and expenses on Schedule C. You can deduct gambling losses as job expenses using Schedule C, not Schedule A.


          This is good too, once again I can't see a lottery player being this meticulous, not even RJOh:

          Kinds of Gambling Records Do I Need to Keep?

          The IRS requires you to keep detailed records of your gambling winnings and losses, and to keep any related documents, including receipts, tickets, payment slips, statements, Form W-2G, and Form 5754. You must be able to prove both your winnings and losses if you wish to deduct your losses. The IRS suggests that you keep a gambling log or diary.

          The IRS requires you to keep the following information about each gambling win and loss:
          &#65533;Date
          &#65533;Type of gambling activity
          &#65533;Name and address of the establishment or event
          &#65533;Names of other people there at the time of the activity
          &#65533;Amounts of winnings and losses

          If you efile your tax return, you do not have to send any W-2Gs or other documents to the IRS (but you must keep them for your records in case of audit).

          Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

          Lep

          There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

            Tami333's avatar - winifrid
            Michigan
            United States
            Member #139344
            February 20, 2013
            1142 Posts
            Offline
            Posted: November 21, 2014, 8:59 pm - IP Logged

            Where are all the Michigan losers?  I'll just be the first one to be honest I guess. 

            1) The Michigan State Lottery has a few grand of my money from all the 3-digits I lost on!

            2) If I add up years of my generous contributions, I believe that I have purchased at least  a dozen or so computers for Michigan Schools. (Hmm?)

            3) Therefore, should I be so lucky to hit $500 on a few tickets, I have already paid my taxes, donated to schools, bought the executives dinner, etc.....and yes, I love to play the lottery and I am a Lottery Addict. 

            "Still a loser until I hit the Mega Millions !!!!"

              Avatar

              United States
              Member #160355
              October 25, 2014
              101 Posts
              Offline
              Posted: November 21, 2014, 9:13 pm - IP Logged

              In your original post, you said, "that is not taxable," in reference to a large accumulation of small wins.

              I showed the contrary, and that was really the only purpose of my post. If you win any sum of measurable amount you will have to put it through the system at some point, and that is where they would nab you. The saying goes, even drug dealers pay their taxes. The IRS is not one to mess with.

              You, like most casino/lottery players, may win $100 here and there, but at the end of the day, are the net winnings enough to exceed your deductions and actually trigger a tax? Probably not. Again, I am referring to significant cumulative winnings over the year.

              P.S. Most casinos now require IDs (either player's card or DL), and therefore a paper trail would likely exist even on small wins. But as I said above, small wins are irrelevant if they don't exceed your deductions, so I digress.

              LottoMetro, yes you are correct. Except the casino part. I been to every casino in Atlantic City and Eastern Pa and was never once

              asked for an ID unless a slot hit was over $1299 (if i remember correctly)...

              As far as a players card...only a fool would use.

              And as correct as you are as far as income goes, sure it it SUPPOSED to be reported. But then again so are those tax free internet purchases

              made online supposed to be reported to your state (if your state has a sales tax) so you can pay the applicable tax. I'm sure we all do that.

                Tami333's avatar - winifrid
                Michigan
                United States
                Member #139344
                February 20, 2013
                1142 Posts
                Offline
                Posted: November 21, 2014, 9:18 pm - IP Logged

                A gas station owner on my way to work told me his lottery machine broke down "WEEKS" ago.  Then it was the "Satellite".  I assumed the MSL replaces "broken" equipment but he told me they wanted $10K because he broke it.  LOL!  Now that this article was posted, I wonder if he was one of those retailers. He continues to tell me next week, next week.  Well, when I noticed his scratch-offs started to disappear, it all makes sense now.  Interesting!

                  Avatar
                  Kentucky
                  United States
                  Member #32652
                  February 14, 2006
                  7310 Posts
                  Offline
                  Posted: November 22, 2014, 7:28 pm - IP Logged

                  Stack47,

                  Atlantic City did a lot to ruin the business and what you described is part of it. And sadly most river boast casinos follow the AC model. the pit bosses are down in the lowest deck of the boat looking at computers and doing paperwork.

                  The floor calls down and says some one wants a $5,000 marker and the pit says, "Who is this guy?"

                  Sad.

                  No dealers don't ask for ID, dealers have enough to do just dealing the game. The floor asks, "Would you like to have your play rated?"

                  There's some question here about winnings and taxes. I doubt any lottery player would qualify as a professional gambler, but here goes, from e-file:

                  What If I Am a Professional Gambler?

                  The rules described on this page are for the majority of people with gambling income, those who are not professional gamblers. If gambling is your actual profession, then your gambling income is generally considered regular earned income and is taxed at your normal effective income tax rate.

                  As a self-employed individual, you will need to report your income and expenses on Schedule C. You can deduct gambling losses as job expenses using Schedule C, not Schedule A.


                  This is good too, once again I can't see a lottery player being this meticulous, not even RJOh:

                  Kinds of Gambling Records Do I Need to Keep?

                  The IRS requires you to keep detailed records of your gambling winnings and losses, and to keep any related documents, including receipts, tickets, payment slips, statements, Form W-2G, and Form 5754. You must be able to prove both your winnings and losses if you wish to deduct your losses. The IRS suggests that you keep a gambling log or diary.

                  The IRS requires you to keep the following information about each gambling win and loss:
                  &#65533;Date
                  &#65533;Type of gambling activity
                  &#65533;Name and address of the establishment or event
                  &#65533;Names of other people there at the time of the activity
                  &#65533;Amounts of winnings and losses

                  If you efile your tax return, you do not have to send any W-2Gs or other documents to the IRS (but you must keep them for your records in case of audit).

                  The first time I went to AC, I wondered why anyone would build mega casinos in a slum area and 15 years later is was still the same. The hand writing was on the wall when PA passed casino gambling legislation.

                  As you probably noticed, there is lots of casino gambling misinformation, but even though I've never been carded to play table games, it's possible. And speaking of misinformation, Before Ohio passed their casino legislation, people opened Internet caf�s that were slot machines paying off in phone minutes and under the table cash. It changed to a max of $10 cash payoff and one of our LP members say they won over $100, but never said how much they were paid.

                  The key difference between professional and casual gambling to the IRS is using Schedule A or C and unless they kept all the records before, a jackpot winner couldn't file as a pro to lower their taxes. I've always thought the "names of others" was interesting and wonder how closely they follow it.

                    Avatar

                    United States
                    Member #160355
                    October 25, 2014
                    101 Posts
                    Offline
                    Posted: November 23, 2014, 8:09 am - IP Logged

                    The first time I went to AC, I wondered why anyone would build mega casinos in a slum area and 15 years later is was still the same. The hand writing was on the wall when PA passed casino gambling legislation.

                    As you probably noticed, there is lots of casino gambling misinformation, but even though I've never been carded to play table games, it's possible. And speaking of misinformation, Before Ohio passed their casino legislation, people opened Internet caf�s that were slot machines paying off in phone minutes and under the table cash. It changed to a max of $10 cash payoff and one of our LP members say they won over $100, but never said how much they were paid.

                    The key difference between professional and casual gambling to the IRS is using Schedule A or C and unless they kept all the records before, a jackpot winner couldn't file as a pro to lower their taxes. I've always thought the "names of others" was interesting and wonder how closely they follow it.

                    Any Casino I have been to in Atlantic City or Parx in pa..when i won on a machine I cashed out on a self serv machine.

                    I have cashed out over $2000 on self serv machines meaning no teller or human interaction needed and also meaning no ID required.

                    The 2k I have won were all on individual tickets worth about $500 ea or less. Played either on a video roulette wheel or in AC on 

                    an Airball (organic Roulette wheel) where there is no live dealer (croupier) at all.

                    With all that being said the lottery (here anyway) is headed in that direction.

                    At any Wawa in NJ or PA there are all self serv lottery machines. They are for scratchers and/or numbers  play.

                    When/if you win you feed your winner in and can get credits applied to the machine for play or you can have the machine print out a 

                    voucher to be cashed at the register. So if I was at the self serv machine and played $1 on the same pick 3 number 100 times

                    it will print out 100 seperate tickets. If I won that night say on a pick 3 box it would pay a total of 8k or 16k depending on what numbers you

                    played. Now with that being said BEFORE I went to the self serv machine I would ask the manager at the store how much he has on hand to pay 

                    out. Then go to the self serve machine and print out that many vouchers.  Then go to another Wawa and do the same thing until i had my cash. 

                    The only thing I am not certain about is if you played that heavy on one set of numbers if it would trigger a red flag to the lottery computers and 

                    they in turn flagged your tickets to be used on a claim form. Which in that case would be BS. PA doesn't require state tax on lottery to residents 

                    anyway so not sure why they would care so much on a win.

                      Avatar

                      United States
                      Member #160355
                      October 25, 2014
                      101 Posts
                      Offline
                      Posted: November 23, 2014, 8:15 am - IP Logged

                      Where are all the Michigan losers?  I'll just be the first one to be honest I guess. 

                      1) The Michigan State Lottery has a few grand of my money from all the 3-digits I lost on!

                      2) If I add up years of my generous contributions, I believe that I have purchased at least  a dozen or so computers for Michigan Schools. (Hmm?)

                      3) Therefore, should I be so lucky to hit $500 on a few tickets, I have already paid my taxes, donated to schools, bought the executives dinner, etc.....and yes, I love to play the lottery and I am a Lottery Addict. 

                      "Still a loser until I hit the Mega Millions !!!!"

                      100% agree. When you lose they don't give two $hits about you. So it should be the same when you win, right?

                        Avatar
                        Kentucky
                        United States
                        Member #32652
                        February 14, 2006
                        7310 Posts
                        Offline
                        Posted: November 24, 2014, 4:34 pm - IP Logged

                        Any Casino I have been to in Atlantic City or Parx in pa..when i won on a machine I cashed out on a self serv machine.

                        I have cashed out over $2000 on self serv machines meaning no teller or human interaction needed and also meaning no ID required.

                        The 2k I have won were all on individual tickets worth about $500 ea or less. Played either on a video roulette wheel or in AC on 

                        an Airball (organic Roulette wheel) where there is no live dealer (croupier) at all.

                        With all that being said the lottery (here anyway) is headed in that direction.

                        At any Wawa in NJ or PA there are all self serv lottery machines. They are for scratchers and/or numbers  play.

                        When/if you win you feed your winner in and can get credits applied to the machine for play or you can have the machine print out a 

                        voucher to be cashed at the register. So if I was at the self serv machine and played $1 on the same pick 3 number 100 times

                        it will print out 100 seperate tickets. If I won that night say on a pick 3 box it would pay a total of 8k or 16k depending on what numbers you

                        played. Now with that being said BEFORE I went to the self serv machine I would ask the manager at the store how much he has on hand to pay 

                        out. Then go to the self serve machine and print out that many vouchers.  Then go to another Wawa and do the same thing until i had my cash. 

                        The only thing I am not certain about is if you played that heavy on one set of numbers if it would trigger a red flag to the lottery computers and 

                        they in turn flagged your tickets to be used on a claim form. Which in that case would be BS. PA doesn't require state tax on lottery to residents 

                        anyway so not sure why they would care so much on a win.

                        The only difference between the lottery self serve vending machines and those at casinos is paying off in cash, vouchers, or tickets. Slot machines are programmed to stop functioning, except with all the bells and whistles when a "must fill out a W2-G" prize is won. And as you said, casinos will pay off accumulative winnings without requiring players to fill out W2-G.

                        If someone did have 100 winning pick-3 straight tickets, it would probably take much longer to get paid in full, but it could be done without any IRS forms. We always get arguments about tax liabilities on multiple pick-3 winning tickets, but not having to pay taxes on prizes under $600 applies to all prizes under $600.

                        You asked an interesting question about how the lottery people view playing and winning on multiple tickets. They probably hope none of the non-lottery and/or gaming savy reporters hears about it. LOL