When a gambler wins $1,000 on a pull of the slot machine, it's customary for her to yell "Jackpot!"
Soon, he or she may be forced to add another exclamation: "Paperwork!"
The IRS has proposed a rule that would reduce the size of the winning that would lead to the immediate filing of a tax form (called a W-2G) from $1,200 to $600. That may not sound like a big deal, but the prospect has the casino industry up in arms, with analysts and consultants warning it could put a serious damper on gambling profits.
"I think it would have a big effect on the overall experience for slot players, as it's very common to have jackpots over $600, and now they'll actually have to stop play and wait for the attendant to come over," said Chad Beynon, who covers gaming stocks for Macquarie.
"That does a few things. First of all, it's just a pause in the game that causes people to lose their momentum and maybe decide to go home," he added.
"Second, people want to walk away after what they consider to be a big jackpot," Beyon said. "Whereas before they would have played a couple more hours and not left until they hit a bigger jackpot, this is kind of the government telling you that you just won a lot of money."
Beynon added that the first companies it will hit are the casino operators like Penn and Boyd, although game suppliers like Scientific Games could also be impacted. The 3 percent to 5 percent reduction in profits Beynon believes is a potential outcome would also lead to a reduction in capital expenditures.
Of course, this assumes that the plan will actually pass. Thus far, the IRS has only proposed the move, and the response of the gambling industry has been vociferous.
The American Gaming Association warned in a news release that the threshold reduction would "lead to a decrease in state gaming revenues and harm the customer experience." The trade group also collected more than 10,000 signatures on a petition opposing the change.
"It just seems like cooler heads will prevail here," said Anthony Curtis, the publisher of the "Las Vegas Advisor" newsletter. "It's going to affect everyone adversely to some degree, if you're just talking about inconvenience, and I'm dubious about what it's going to accomplish for the IRS."