Take the gift card or the free play?

[Alan Mendelson]

Some casinos are making you choose your promotion offer. In some cases you can choose between a "gift card" to a store or gift card for gas with a particular brand, or you can have the same dollar amount in "free play" for either table games or slot or video poker play.

Which would you choose?

Here's how I look at an offer for $100 for a gift card to Macy's or $100 of free play:

The Macy's gift card to me is worthwhile because my wife often shops at Macy's and that's $100 in the bank, so to speak. Had it been a $100 gift card to Starbucks the card would be worthless to me, but I might send it to my daughter who goes to Starbucks on a daily basis. If it were a $100 gift card for backpacking through the New Mexico desert during August I would simply pass.

The $100 of free play option makes you dream of using that $100 to hit it big -- so big that the $100 gift card would seem like pocket change. But I would look at the $100 of free play and ask myself -- what are the chances of turning that $100 free play into money in my pocket?

If playing a game such as 9/6 Jacks or Better which returns about 99.5% the math is already telling me that I will likely lose some of that money.

But if I could use that "free play" as entry into a poker tournament, or as a buy-in for poker where I stand a chance of beating the odds, taking the free play option might be better.

What we don't know is how much the casino paid for the gift card? If the casino paid only 80% of the gift card's value the casino might prefer that we take the gift card than play a game with a 99% or better return. But then, the casino might be thinking that even if we take their "free play" to a game with a 99+% return we might end up losing it all anyway.

What do you think?

[Vegas Vic]

Agree...it would depend on where the gift card could be redeemed. $100 in free play would also earn you player's club points, but you'd have to get some incredible and nearly impossible mileage out of that play to earn $100 worth of point comps. If the gift card were to one of my favorite restaurants, I'd probably take the card. If I knew for a fact that the gaming Gods were looking favorably on me, I'd take the play...(you never can tell).

[Alan Mendelson]

I just heard from a friend who was at a casino for a "gift card" promotion. The more you played (points) the higher the value of the gift card was the deal. But, he said, after $599 worth of "gift cards" they gave you a W2. To avoid the W2 after $599 worth of gift cards you could take "free play certificates."

[Vegas Vic]

I just heard from a friend who was at a casino for a "gift card" promotion. The more you played (points) the higher the value of the gift card was the deal. But, he said, after $599 worth of "gift cards" they gave you a W2. To avoid the W2 after $599 worth of gift cards you could take "free play certificates."

I wonder under what statute or regulation this $599 limit brings the W2.

[Alan Mendelson]

Take a look at the instructions for the W2G... http://www.irs.gov/pub/irs-pdf/iw2g.pdf for "reportable gambling winnings."

Somehow they consider the gift cards to be some sort of gambling win. I look at it as a "rebate" and I hope someone who knows the law might comment. Any accountants?

[Vegas Vic]

Take a look at the instructions for the W2G... http://www.irs.gov/pub/irs-pdf/iw2g.pdf for "reportable gambling winnings."

Somehow they consider the gift cards to be some sort of gambling win. I look at it as a "rebate" and I hope someone who knows the law might comment. Any accountants?

But if you were playing slots, why would this non-slot category be applied? You'd be playing slots and if you never hit that single jackpot of $1,200, you could play all day, accumulate the points and never have a W2G. That particular clause is for tables and is rarely ever actually used. Gamblers win money at the tables all the time and seldom get a W2G....but that's a different discussion.

[Alan Mendelson]

I agree with you. The $600 reporting requirement applies to things such as lottery tickets, and winning superfectas at racetracks. I guess the casinos also apply it, even though there is a specific reporting threshhold for slots at $1200. Why the casino wants to apply it for gift cards is beyond me.

And yes you can win a fortune at the tables without getting a W2 but that does not mean you're not liable for the taxable win. You are responsible for declaring all taxable income including table game wins.