If you’re entertaining dreams of owning your own casino one day, you’ll need anywhere from a few thousand dollars to a few billion.
The casino business is so lucrative that every time a new casino opens as “the most expensive casino ever built,” investors pop champagne bottles and raise a toast. It wasn’t always that way. Only a few decades ago, casino operators built on slim budgets.
If you were to get on a lucky roll at craps or a streak at 21 the winnings are tax free but any cash transaction in a single day over $10,000 is reported to the IRS. Make sure you have your ID or you may not be able to cash out your chips.
Steve Wynn gambled big in the late ‘80s when he opened The Mirage in Las Vegas. Wynn and his backers invested an unheard-of $630 million in the new casino. At the time, industry analysts calculated the casino would have to turn an average daily profit of at least $1 million to meet its financial obligations.
In 2019 dollars, that isn’t so bad. If a casino has only 1,000 gaming machines, it can turn a $5 million daily profit just by retaining an average $1000 per machine.
You’ve just had a lucky night. While you are still in the casino, you will need to provide identification and sign IRS tax forms in order to accept your prize. And then you get your money, right? Casinos have various ways of paying winners. Generally, if the winnings are $25,000 or less, winners can choose between cash or check. However, if you win a prize during the second “set” of spins, that means you can continue playing and this time, you are enabled to choose more than 10 rounds per betting session. It all depends on the credits you have earned. Repeat the steps above and cash out whenever the number of your credits reaches the critical level.
According to a 2015 Las Vegas Sun article, about 40 million people visited Las Vegas on an annual basis at that time. That works out to nearly 110,000 visitors to Las Vegas daily. There are just over 100 casinos in Las Vegas.
In 2017, it was then reported that annual visitors had climbed to more than 42 million.
If each visitor loses only an average of $100 per day, Las Vegas is raking in $11 million in casino earnings every day. The reality is much more startling.
In 2013, the University of Nevada, Las Vegas published a study on the daily revenues of the 23 big casinos on the Strip. To be included in the study, a casino had to produce gaming revenue at least $72 million a year. The average for each of the big 23 turned out to be over $230 million per year.
That’s a far cry since The Mirage opened in 1989, but competition has changed the city’s gaming industry. Here is a deeper look at what it costs to build a casino.
Location, Location, Location
If you want to build a casino for as little as possible, buy cheap land. Where that wicket becomes sticky is in finding the right land. Not only do you need favorable laws allowing gambling and zoning for casinos, but you also need at least a good nearby highway.
Las Vegas is a hub for three Interstate highways and several US highways. The city is also home to McCarran International Airport. About 40 million passengers pass through the airport every year.
Considering AmTrak carries passengers to the city as well, tourists visit the city by car, bus, train, and plane.
If you decide to build your own casino, lacking the transportation channels that Las Vegas boasts means your location will attract fewer annual visitors. This probably explains why few cities dominate the casino industry. The casinos need both good zoning and access to transportation to attract visitors.
Hence, you should expect to pay a lot of money for the land.
Size Counts In Every Way
The Mirage currently boasts about 2,000 slot machine games. While that sounds like a lot, the WinStar World Casino in Thackerville, OK has about six times the floor space as The Mirage. The WinStar opened in 2003, making it 14 years younger than The Mirage.
According to their website in 2019, the WinStar holds about 8400 slot machines. They also have a 55-table poker room, all squeezed into 400,000 feet of floor space. If you want to compete with the WinStar, you’ll need a lot of floor space and thousands of more games.
The casino is owned and operated by the Chickasaw Nation, who had plenty of available land for development. That’s an advantage over the average commercial developer. By owning the land as part of their reservation, they were able to invest more in creating a high-quality resort.
You Need a Hotel and Restaurant
One reason why good casinos cost so much to build is the bigger casinos contain or are paired with big hotels. By providing their visitors with safe, comfortable accommodations, they ensure those visitors spend more time in their gaming areas.
On-site entertainment and dining venues enhance the hotel and casino experience. The farther away from Vegas and Atlantic City one gets in the United States, the less extravagant the casinos tend to become.
Only a handful of states and cities allow commercial casinos to congregate in their jurisdictions. The demand for suitable land limits the competition.
Biloxi, MS is North America’s third big commercial casino hub.
The Beau Rivage may be the best known of the Biloxi casinos. They only offer about 1800 slot games. Owned by MGM Resorts, Beau Rivage promotes its hotel, entertainment, dining, and nightlife venues equally with the casino.
These are not afterthoughts. They are part and parcel major pieces of the whole package.
According to Fixr.com, the average cost of a hotel in the United States is just over $22 million. A hotel comparable to the resorts at WinStar or Beau Rivage will easily set you back in the hundreds of millions of dollars.
Factor in the Cost of Games
Assuming the hypothetical new casino brings in a lot of slot machines, how much do they cost?
How Much Can You Cash Out At A Casino
The website HowMuchIsIt.org rounds up a list of price ranges for popular slot machines. Expect to pay at least several thousand dollars per basic game. The enhanced games may run $30,000 or more for the consoles.
If you can bring enough people in, the games should pay for themselves in only a few months. That’s not so bad.
However, the games will need to be maintained. A new casino must include the cost of hiring qualified staff or for paying authorized service contracts.
Plant Operations Are Expensive
Whether you’re building a roadside casino with 100 machines or planning a massive resort with more than a handful of casino games, the buildings will need electricity, water, heating and air systems, sewage, and maintenance areas.
Assuming a modest 200-room hotel is built on the property, it will have its own plant facility. Ditto for a small restaurant.
This new casino will need tools and equipment no one thinks about when pushing buttons and counting cards. There are lighting systems, sound systems, security systems, communication systems, and staff offices.
Employees will need dressing rooms and lockers, or at least their own break room.
Administration will need at least one office, maybe two if there is a dedicated full-time security team.
The cashiers will need a counting room and vault.
How Much Can You Cash Out At A Casino Without Taxes
All these facilities must be built out, equipped, and brought online. This is all before you hire your first employee.
Conclusion
If the idea of building a new casino seems crazy, it is. This is an industry for billionaires and rich investment fund managers to play in. It’s not for the faint-hearted or small business person.
It’s true there are hundreds of small casinos that do just fine. With only a few dozen to a few hundred games, they cater to local customers. They don’t need big highways, trains, and airports.
Even so, the cost of setting up a small commercial will run into the millions of dollars. Most communities won’t accept commercial casinos. Most states don’t license them. The Native American tribes may contract with casino management companies but only the big ones.
In short, it costs a lot of money to open a casino. Buying one is out of the question for most people. Donald Trump is believed to have lost about $1 billion in investors’ money by trying to buy his way into Atlantic City.
Short of inheriting a small fortune or casino, this kind of development is one game well beyond the reach of typical investors and small business owners.
It’s every gambler’s dream to hit a huge payout and to bring home a pile of cash. But how much of that cash can you legally keep, and how much goes away in taxes?
Well, the rules differ from country to country.
For this article, we’ll focus on the ins and outs of gambling taxes for UK players, and then for US players.
First, here’s a quick summary of what we’re going to talk about:
- UK gamblers playing at UK casinos do not have to declare or pay taxes on their winnings
- US casinos will ask for tax information & withdraw taxes if a player wins $600+ in one go
- US gamblers must declare all winnings during tax month under “Misc. Income”
As we’ll explain in this article, the specific details may differ from casino to casino. Let’s take a closer look at how it all works.
Taxes for UK Gamblers: Land-based & Online Casinos
We’ll keep it simple for the case of UK casinos and gamblers, because there’s really not much to say.
You do not have to pay taxes on any of your winnings.
And this is true whether you’re a professional gambler or a recreational one. In the UK, gambling winnings aren't viewed as income, so don't have to be declared as such.
So if you depend on gambling winnings as a form of income, or if you’ve just hit a one-off jackpot, you don’t have to worry about calculating percentages to give away.
Cashing Out at Casinos
Of course, when it comes to cashing out, you’ll be restricted by the casino’s withdrawal limits. You can still cash out as much as you like – simply, you'll have to take it out in multiple installments if you have to.
As it’s the casinos & bookmakers who get hit by taxes, you may find that UK casinos have slightly smaller withdrawal limits than US ones.
But we think it’s worth the hassle of multiple withdrawals and eventually paying multiple withdrawal fees to the casino, if you get to keep it all afterward.
Taxes For US Gamblers: Land-based Casinos
Unfortunately for US gamblers, it’s pretty much the opposite in their country. In the states where gambling is legal, gambling winnings are indeed treated as a form of income and are fully taxable.
If you’re a US resident, taxable gambling income includes:
- Lotteries
- Raffles
- Horse races
- Casino winnings (slots & card/table games)
Like in many countries, there is a threshold beyond which your income becomes taxable. A few years ago the tax threshold for gambling winnings was $1,200 – now it’s gone down to $600.
The question therefore changes to: “When do I have to file my own taxes, and when does the casino do it for me?”
Triggering a Tax Form
Imagine that you’re in a land-based casino, playing with a friend. You get lucky and win $600 with just one spin or hand, while your friend gets $600 of overall winnings.
In your case, during the casino’s cashing-out process, you’ll be asked to fill out a W-2G (or a “1042-S” for non-US residents). The casino will then withhold the tax themselves and you’ll go home with your net winnings.
In your friend’s case, he’ll be able to go home with his gross $600 winnings. He’ll have to file taxes on that income himself.
As you can see, there are rules for triggering a tax form at a casino. They are as follows:
- You can cash out $600 of overall winnings without paying taxes
- You must pay taxes straight away if you win $600+ on one spin or hand.
In any case, you’ll have to pay taxes on those winnings. But the difference here is that you’ll be able to cash out $600 without the casino removing the tax percentage for you.
Paying Taxes When Cashing Out
Like we mentioned, when you get your money paid out to you at the land-based casino, the casino must issue you a W-2G.
If you got lucky and cashed out your overall winnings without getting taxed, don’t get your hopes up. You’re still going to have to report that income.
You’ll do this by declaring your winnings on your 1040 form as “Other Income”. This includes all winnings that didn’t require reporting on the W-2G.
Paying Taxes as Non-US Residents
As seen on the IRS official website:
The US has a tax treaty with UK, so UK residents aren’t subject to US income tax on gambling winnings.
This however doesn’t mean that you’re exempt from any taxes. At some casinos, you’ll find that you’ll simply have to pay a lower percentage.
In certain cases, the tax amount will still be withheld from your winnings. In order to get it released to you, make sure to arm yourself with your UK passport as well as an ITIN.
Taxes For US Gamblers: Online Casinos
Now, you might be thinking that you can get away with not paying taxes on money you’ve won online. You might try to stick it in an anonymous Bitcoin wallet and hope for the best.
But the IRS can very easily trace online winnings. In order to be operating legally, your online casino must conform to regulations.
This means that if the IRS comes knocking at their door, they’ll be contractually obliged to offer up your records.
So, the same rule applies. When do you have to file your own taxes, and when does the online casino do it for you?
Triggering a Tax Form
For online cash games, players are often given their full gross payout. That means they then have to file their own taxes. It’s during tournaments that casinos may withhold the percentage owed to the government.
Sometimes, online casinos will keep all winnings and players will get an email requesting them to give tax information. This happens when you:
- Win $600+ in a freeroll tournament
- Win $5,000+ in a regular tournament
The site will only release winnings once they receive information. You’ll sometimes get the choice of letting the site keep the tax percentage, or getting all the winnings and having to file your taxes yourself.
Declaring Gambling Income
When it comes to declaring your own winnings and filing your own taxes, you may have to declare it differently according to your situation.
- Professional gamblers: pay income & self-employment taxes on their declared “revenue”
- Recreational players: report winnings as “Misc. Income”
Cashing Out Casino Winnings: How it Happens
Now that that’s all out of the way, you may be wondering how the cash-out process actually works, and in what order things are done.
Let’s take a closer look at what you can expect. This holds true for both US and UK casinos. First we’ll look at how you cash out from a land-based casino, and then how you cash out from an online one.
Cashing Out From a Land-Based Casino
When you win a jackpot, you obviously won’t be getting thousands of pounds’ worth of notes chucked right into your lap.
High amounts of money call for heightened security.
There are several ways to cash out your winnings. It all depends on the casino you’re playing at, and the number of winnings you’ve just won.
Cashing Out Small Amounts
Winnings from slot machines: you’ll get a cash-out voucher from a TITO (ticket in, ticket out) machine. These can be redeemed from the casino’s reception, or from an automated kiosk.
Winnings from table & card games: you’ll take the chips you won to the casino’s reception, where they’ll be exchanged for cash.
Cashing Out Large Amounts
If you’ve hit a particularly big jackpot, you will be directed to a private room with guards for extra security.
In this room, a cashable voucher will be made for you to justify that you won the money. Then your money will be either hand paid in front of you, or put through a money counter.
Usually you can choose to get it in cash, or as a cheque. Sometimes cheques incur a delay, where you have to wait a few business days before you receive the cheque in the mail.
In some cases, the clerk will count out your bills in front of you so you can be sure that you get the full amount you won. They’ll often get guards to escort you to your car.
Cashing Out From an Online Casino
This is pretty straightforward: you’re the one who controls when you withdraw money from your online casino account, how much you withdraw, and where you withdraw it to.
According to the payment method you’ve chosen, the cash-out process may take anywhere between a few hours to a few weeks.
The times are usually as follows:
- E-wallets: 0-24
- Credit/debit cards: 2-4 days
- Bank transfers: 1-3 days
- Cheques: 2+ weeks (rarely offered)
To cash out, simply go into your user profile and navigate to the “Withdraw” function. You’ll be prompted to enter an amount, and a payment method to withdraw it.
Once you hit withdraw, you’ll fill out your banking tool’s payment verification process, and that’s it. Bear in mind that you can only withdraw from your regular casino account – not your bonus casino account.