Method for meeting IRS reporting requirements related to an electronic gaming machine

This invention relates to a new method for meeting the United States Internal Revenue Service's reporting requirements for electronic gaming machine devices such as slot machines. The present invention provides a separate storage means that keeps track of gross winnings on individual plays of a slot machine that exceed a predetermined amount (jackpots), and permits the accumulating jackpot winnings to be used by the player for additional play of the slot machine. The amount of winnings in the jackpot meter is then used to determine the amount of winnings to be included on an IRS reporting form called a W2-G Form. The present invention avoids the time consuming and error prone system currently used and provides the player with a more enjoyable gaming experience, and at the same time provides the IRS with more accurate information. Rather than numerous W2-G Forms for each jackpot exceeding the predetermined limit, only a single W2-G Form need be prepared at the end of a playing session.

BACKGROUND OF THE INVENTION 
FIELD OF THE INVENTION 
This invention relates to a new method for meeting the United States 
Internal Revenue Service's (IRS) reporting requirements for gaming machine 
devices such as slot machines and video poker machines. 
The IRS requires gaming establishments and casinos to report all payouts, 
also called jackpots, to players equal to or greater than a specified 
amount (currently $1,200) on IRS Form W2-G. For the purposes of this 
application, a payout in excess of the IRS reporting threshold is referred 
to as a jackpot. The casino is required to obtain the player's Taxpayer 
Identification Number and prepare a W2-G Form for each and every payout 
that meets the criterion defined above. Thus, each time a player receives 
$1,200 or more on a jackpot, the casino must stop play and then issue a 
W2-G Form. The IRS uses the W2-G Form to ensure that it collects taxes on 
jackpots. However, the IRS allows players to offset their winnings with 
documented losses. Typically this results in the taxpayer having to obtain 
proof of the losses incurred during the year, a cumbersome and risky 
project. 
The IRS has used this procedure for many years because there was no 
technology available to capture the information in any other manner. 
The current reporting procedure has proven to be very cumbersome 
particularly for slot machines recently introduced which accept up to $500 
tokens. A player can play up to two of these tokens at a time. Any payout 
that exceeds two tokens currently requires a W2-G Form. Payouts of this 
size are very common. Each time the slot machine exceeds the IRS 
determined threshold, the slot machine is automatically "locked up" and 
cannot be played until an attendant prepares a W2-G Form and uses a key to 
clear the slot machine and make it ready to play again. This is a very 
tedious process which can result in literally hundreds of W2-G Forms being 
prepared and issued over several days. W2-G Form preparation is manual, 
and could be subject to error. It takes approximately 5 minutes to prepare 
a single W2-G Form. 
Further, since the W2-G Form is prepared after each jackpot the W2-G Forms 
do not reflect any of the subsequent losses of the player of the jackpot 
winnings. Thus, the accumulated W2-G Forms grossly overstate the actual 
winnings of a player. For example, if a player plays $100.00 and wins a 
jackpot of $10,000.00 a W2-G Form is issued for $10,000.00. If the player 
subsequently plays all $10,000.00 and loses it all, the W2-G Form still 
shows $10,000.00 of reportable income. 
SUMMARY OF THE INVENTION 
The present invention eliminates the need to prepare a W2-G Form every time 
a payout exceeds the predetermined IRS threshold. Instead, the present 
invention automatically maintains the information in the slot machine 
required for the attendant to prepare a single W2-G Format the end of the 
playing session. The amount reported on the W2-G Form is the net jackpot 
winnings, which is the gross amount of jackpots less the amount 
subsequently wagered from the jackpot proceeds. 
In the prior example of a player playing $100.00 and winning $10,000.00 and 
then losing $10,000.00 of jackpot proceeds, there would be no reportable 
income so no W2-G Form would be required. 
This invention provides a new, efficient method for meeting the IRS 
reporting requirements for electronic gaming machine devices. The present 
invention avoids the time consuming and error prone manual system 
currently used in issuing W2-G Forms and provides the player with a more 
enjoyable gaming experience, and at the same time provides the IRS with 
more accurate information. 
OBJECTS OF THE PRESENT INVENTION 
It is an object of the present invention to efficiently generate an 
accurate IRS W2-G Form for the amount of net jackpot win in a playing 
session. 
It is another object of the present invention to provide a simplified 
system of record keeping of reportable IRS winnings from a gaming device. 
It is a further object of the present invention to obtain increased 
accuracy of reporting of IRS reportable gaming winnings. 
It is another object of the present invention to save time for the player 
and casino. 
It is another object of the present invention to provide convenience to the 
player and casino.

DETAILED DESCRIPTION OF THE DRAWINGS 
Referring to FIG. 1, a gaming apparatus in the form of a slot machine 10 
incorporating the features of the present invention is shown. 
The slot machine 10 has the conventional features of a game display area 
12, a starting mechanism which can be either a handle 14 or button 16; 
money or token inputs for either coins 18 and/or paper currency 20; the 
conventional credit display 22; a betting control button 24; a payout 
hopper 25; and a conventional credit payout button 26. 
In addition to the above conventional features, the slot machine 10 of the 
present invention includes a second credit display 28 for displaying net 
jackpot winnings. In the preferred embodiment the second credit display 28 
is a separate display from the conventional credit display 22. By means of 
suitable electronic controls, a single credit display may be used to 
display both the conventional credits and the net jackpot winnings. 
FIG. 2 is a flow chart showing the prior art method for preparing W2-G 
Form's for jackpot winnings. The IRS limit is predetermined. The player 
initiates a game by inserting money in the form of a token, coins, or 
paper money into the money slot 101 of the gaming device. The game 102 is 
played. If the game results in a winning combination of symbols resulting 
in a payout, the logic in the gaming device's microprocessor checks 
whether the dollar value of the payout is equal to or greater than the 
predetermined IRS limit. If this is true 103, the slot machine 10 is 
locked 150 to prevent further play. An attendant prepares a W2-G Form 104 
and then uses a meter reset key 105 to reset the slot machine to enable 
further play. The jackpot is hand paid 106 by the attendant. The 
microprocessor used in slot machines is standard and well known to those 
in the industry, as are comparison circuits and memory storage devices 
associated with credit meters. 
If the payout is less than the IRS limit 107, the gaming device's 
microprocessor checks to see if the slot machine is being played in credit 
mode 108. If it is not being played in credit mode 108, the tokens are 
paid out through the hopper 109 and the player can replay them at 101. If 
the slot machine is operating in credit mode 108, a value of credits 
corresponding to the payout amount is placed on the gaming device's credit 
meter 110. The player can play these credits by pressing the credit bet 
key 111. Alternatively, the player may press the cash out button 112 and 
retrieve tokens from the hopper 113. 
FIG. 3 shows the flow chart of the present invention in a gaming device 
which accepts gaming tokens or coins exclusively. The IRS limit is 
predetermined. The player initiates a game by inserting a token or coin 
into the gaming device 201. The game 202 is played. If the game results in 
a winning combination of symbols, the logic in the gaming device's 
microprocessor checks whether the dollar value of the payout is equal to 
or greater than the IRS limit. If this is true 203, the number of credits 
corresponding to the payout amount is automatically transferred to the 
gaming device's IRS reportable credit meter 204. If the payout is less 
than the IRS limit 205, the tokens are automatically paid through the 
hopper 206. This method guarantees that all winnings that-are reportable 
to the IRS are automatically placed on the IRS reporting credit meter 204 
for later use in preparing the W2-G Form. The player then places a bet 207 
which amount is deducted from the IRS reportable credit meter 204. 
The amount reported on the W2-G Form should consist of the gross winnings 
from jackpots greater than the IRS limit, less the amount of those 
winnings that were bet back into the game from the IRS reporting credit 
meter 204. The player continues playing in this manner until the player 
chooses to stop. The balance shown on the gaming device's IRS reportable 
credit meter 204 is the balance that must be reported on the W2-G Form. A 
slot machine attendant will prepare the W2-G Form 208 and then use a 
manual credit meter reset key 209 to reset the IRS credit meter 204. The 
player will be paid by the attendant 210 or from the hopper 206. 
Typically, any amount over the IRS predetermined limit will be hand paid. 
Lesser amounts can be paid either way depending on management's policies. 
The present invention allows the player to play without annoying 
interruptions and provides a mechanism for reporting more accurate amounts 
to the IRS. 
Referring to FIG. 4, the flow chart for an alternative embodiment of the 
present invention is shown in which tokens, coins and/or other funds are 
played. 
Electronic gaming devices are being enhanced to accept funds from other 
sources. For example, many gaming devices allow the player to use paper 
currency. The number of credits corresponding to the value of the paper 
currency is placed on the credit meter and the player is allowed to play, 
using the bet button as described above, for credits that were transferred 
to the conventional credit meter. When funds are transferred directly to 
the conventional credit meter from such an outside source, the value of 
those funds must be excluded from the amount reported on the W2-G Form 
because they are not reportable winnings. Gaming devices operating in this 
mode will require separate meters to accumulate wins subject to IRS 
reporting separately from funds that are not subject to this reporting. 
As shown in FIG. 4, the operation is as follows: The player initiates a 
game by inserting a token 301 into the gaming device or pressing the bet 
button 310. The game 302 is played. If the game results in a winning 
combination of symbols, the logic in the gaming device's microprocessor 
checks whether the dollar value of the payout is equal to or greater than 
the present IRS limit. If this is true 303, the number of credits 
corresponding to the payout amount is automatically transferred to the IRS 
win meter 304. If the payout is less than the IRS limit 305, the gaming 
device's microprocessor will check to see whether the player is playing 
the machine in credit mode 306. If not, tokens will be paid out of the 
hopper 307. In credit mode 306, funds will be automatically added to the 
other funds meter 308. This other funds meter 308 accumulates funds that 
are available for the player to play that are not subject to IRS 
reporting. 
The total amount of funds from the IRS reporting win meter 304 and the 
other funds meter 308 will be shown on the total credit display 309. The 
credit display 309 is the only credit meter the player will see. When the 
player chooses to play a game using credits, he will press the bet button 
310. The gaming device's microprocessor will first check to see if there 
are funds available from the IRS win meter 304. If there are, those funds 
will be used to play the game. If not, funds will be used from the other 
funds meter 308. This part of the invention will allow the player to play 
from a single credit meter while automatically keeping track of the two 
types of funds. 
Funds that a player supplies through a currency acceptor or other external 
source 311 will be added directly to the other funds meter 308 where they 
will be available for play when the IRS win meter 304 is depleted. 
When the player chooses to stop playing, the following events will happen: 
1. Either an attendant will access the IRS win meter 304 and prepare a W2-G 
Form 312 for the balance of the meter. At 313 on the diagram, a manual key 
would be used to reset the IRS win meter 304 and make the total credit 
display 309 balance available for payment to the player; or 
2. A print out 318 corresponding to the amount of winnings stored in the 
IRS win meter 304 is automatically printed directly onto a W2-G Form 
including all of the required information of the player, thereby 
eliminating any manual preparation of the W2-G Form. The printout 318 is 
either printed at the slot machine or some other convenient location and 
the IRS win meter 308 is either reset automatically or manually as 
described above; and 
3. The player can then cash out 314 through a hopper pay 315 through a 
handpay 317 or by whatever other means may be provided 316. 
This embodiment of the invention allows the player to play a slot machine 
capable of accepting tokens or funds from other sources without annoying 
interruptions and maintains accurate IRS reporting. 
It is also possible to incorporate a third meter that provides a total net 
win or loss of all play on the slot machine in a given session. This can 
be achieved by having a meter that keeps track of all amounts of play, 
adding both reportable and non reportable winnings, and subtracting all 
amounts bet. At the end of a session the attendant can issue a separate 
report in addition to a W2-G Form, showing the net win or loss of the 
player. At the present time, such information can be obtained from the 
players that use casino slot machine cards that are inserted in a reading 
device associated with the slot machine that records all aspects of play. 
However, this information is not available at the location of the slot 
machine itself. 
Alternatively, it also possible to have the player enter identification 
indicia 400 used to identify the player. The identification indicia may be 
a unique code assigned by the casino to the individual or may be the 
player's signature that is electronically reproduced by means well known 
by those skilled in the art, and stored in a microprocessor. At the time 
the identification indicia is assigned, player information such as, but 
not limited to, the player's name, tax identification number, and country 
of citizenship may be recorded and stored together with the identification 
indicia of the player, for future retrieval and used for completing the 
W-2G Form. 
The player may be prompted when the IRS limit is reached, to enter the 
player identification indicia 400. The identification indicia entered is 
verified 401 with the stored identification indicia assigned to that 
player. For example, if the identification indicia is an electronic 
reproduction of the player's signature, the player signs an electronic 
signature pad, well-known by those skilled in the art, and the entered 
signature is compared with the stored signature for that player. If the 
identification indicia is verified, the player may proceed to play the 
game 302 with a token 301 or by using other funds 311 or cash out. If the 
identification indicia is not verified, an attendant is notified 404 and a 
W-2G Form is prepared manually. 
At the end of the session of play, a W-2G Form is created for the player as 
described above, with the player's information that was supplied and 
stored at the time the identification indicia was assigned to the player. 
The use of identification indicia for each player further permits 
citizenship verification 402 of the player for determining whether 
withholding 403 of the amounts due in taxes prior to paying out is 
required if the player is not a citizen of the United States. 
It is appreciated that the entry of player identification indicia 400 may 
have other uses other than determining citizenship of the player as 
described above without departing from the scope of the present invention. 
While the present invention has been described in association with a 
preferred embodiment, it is recognized that other variations of the 
invention may be derived that do not depart from the invention's concept. 
For example, any other payout devices, such as pinball machines, can be 
used in place of a slot machine. Also, the type of game played on the slot 
machine is irrelevant. The scope of this invention also includes machines 
which may be equipped to only operate using funds transferred from and to 
another source; in other words, gaming devices that do not use tokens. 
While the present invention has been described with regards to the 
preferred embodiment, it is appreciated that other variations of the 
present invention may be devised which do not depart from the inventive 
concept of the present invention.