How Do Casinos Pay Out Large Sums Of Money?
One of the biggest online jackpots ever awarded happened in 2013. A Finnish online casino player won 17.8 million EUR (around $17.1 million) on Mega Fortune slots. Another big win happened that same year on Mega Moolah. The slot game winner bet 25p and won 13.2 million GBP, which using current exchange rates (September 2022) is almost $14.3 million.
Have you ever wondered "how do casinos pay out large sums of money?" We're here to help you take a closer look. If you've ever questioned how a casino pays slot game winners when prizes are in the thousands or even millions of dollars, our casino payouts guide has the answers to your questions.
Where Does the Money Come From?
When you win money playing slots, it's the wagers you and thousands of other casino players make that go into the prize pot. It may be from bets on that game in the casino you're in or across a network of casinos. Have you ever played a slot game and noticed the game RTP? That RTP stands for return-to-player. If you see a 96% RTP, it means 96% of the wagers taken in over time are returned to players. This is usually calculated over an extended time period and not a matter of a day or a few weeks.
Income Tax Requirements in the U.S.
Players in the U.S.are required to pay federal taxes on winnings over a certain amount. The rule is winnings of $5,000 or more from sweepstakes, poker games, and lotteries, are subject to a 24% flat tax rate. The same rule applies to any wager where you win 300 or more times your bet. Casinos will withhold that money and give you a W2-G to show the amount you won and the taxes that were withheld.
Gambling winnings from Bingo, Keno, and slots are not always subject to withholding if you provide your SSN. This doesn't mean you get to avoid paying taxes. You may still have to, depending on your state's laws, but you'll do it on your own by making estimated tax payments. You must pay 24% (flat rate) taxes on winnings of:
- $1,200 or more on Bingo or slots
- $1,500 or more from Keno
- $600 or more on other gambling winnings of $600
If you refuse to provide your SSN to the online casino when you win on Bingo, slots, Keno, or other online casino games, the 24% is automatically withheld.
Payouts Are Often Restricted by Max Withdrawal Limits
Every casino has maximum withdrawal limits. They may be daily, weekly, or monthly limits. If you win in excess of that limit, you'll get payments over time. If you've won a big jackpot, there may be exceptions made.
Take Café Casino's withdrawal policies for example.
- $2,000 for new players and $2,500 for VIPs per week for courier checks and Ethereum.
- No limit for Bitcoin Cash, or Litecoin, but there are limits on how often you can request a cryptocurrency casino payout.
- $15,000 per week for Play Transfers.
- $1,000 per week for MatchPlay.
You need to look at their terms to see how often you will get the payments and what the cashout limits are.
What About Lump Sum vs. Annuity Payments?
You may be given a choice between a lump sum payment or annuity payments. Either way, you have to pay taxes on large prizes.
Are lump sum or annuity payments better? It's a personal choice. With a lump sum, you get less money upfront as all of the taxes are taken out at once. You also have the bulk of the money right now and can invest it into high-yield products or real estate investments and stocks without delay.
But, you may not have a choice. Before you play a slot machine, you should look to see what the payment terms are. Some machines may only allow annuity payments.
Remember that winning a lot of money doesn't have to become stressful. Casino support teams are there to help guide you. You can also reach out to a local tax professional in your area for guidance. They can help you understand how do casinos pay out large sums of money and guide you into the right decisions for your needs.