Internal Revenue Service’s (IRS) proposal to roll out stricter norms for casino winnings has pushed the shares of MGM Resorts International (NYSE:MGM) down. As per the reports, IRS has submitted proposal to reduce the reporting requirement of casino winnings from $1,200 to $600 now. The forms of winnings included under the ambit are slots, keno, and bingo. If these rules become effective, then it would mean more tax liability on individuals and higher costs for casino operators.
The tax agency has given 90-day window to the casino operators to respond to the proposed guidelines. The threshold of $1,200 was set back in 1977, which obligated a casino to file tax information if a player amasses $1,200 or more in bingo or jackpot game. The limit was $1,500 for keno. Hence, the suggestion of lowering these limits will escalate costs for casinos as machines will lock up till the times customers fill their tax paperwork. The gaming industry is clearly opposing the new law as they feel it will negatively impact both the public and state treasuries.
Rules not fair
One of the casino operators said that the new rules will add burden on the casino companies, which will need to involve into lengthy and tiring tax processes. People will shy away from playing into casinos, which will eventually erase the state’s revenues.
The gaming industry argued that there is a need for forward-looking policies that is enabling and help create more jobs. The industry trade group based out in Washington D.C. is likely to forward its comments on the new rules before June 1. Since the adoption of rules depends on public comments, therefore, there is no guarantee that IRS will apply these rules compulsorily.
As the IRS awaits comment, some negativity was visible in casino stocks. MGM Resorts International (NYSE:MGM) fell by close to 1.40% to $21.62 during the last trading day.