To date, a lot of online gamers have landed on some pretty hefty sums of money from online jackpot games. While some gamers play and play consistently until they eventually land on huge rewards, others out of sheer luck enrol on offers like 20 free no deposit bonus promotions, and just like that, they land on massive wins on their first few rounds!
However, things are currently going on for you in your online gaming activities, ever wondered what happens when you are declared a jackpot winner at an online casino? Well, obviously, subject to the jackpot’s size, your life is going to change from this point. Nevertheless, before you calculate your earnings, there is one or two things you should be familiar with. Today we bring you a highlight that will help you understand what happens when you win a jackpot, how online casinos manage these payouts.
Verification from the Online Casino
In most cases, winners of large sums will usually undergo identity verification procedures, especially if you aren’t that big of a gamer in the casino. You won’t receive even a cent till your identification is validated. The same applies to foreigners too. In case you lack identification, your cash will be safely held till you provide some. The online casino is not allowed to spend your money. So, before you start getting giddy with excitement, make sure all your necessary documents are in check in case they are requested for verification purposes.
After the reality of winning sinks in, there’s another tax reality that you must face. You have to give Caesar what belongs to Caesar! Assuming you won over $1200, you have to pay tax on all your earnings. So, for gamers in the US, the IRS won’t really care about any winnings between a buck and $1,999.
Any amount of cash between $1,200 and $5,000 is usually regarded as taxable income. And so, you will be required to fill in the details in a W-2G form and declare your earnings to the federal government. In most cases, it will be your responsibility to ensure that you pay these taxes at your own convenient time, within the law. Online casinos are not obliged to deduct held back taxes from bet winnings. All the same, you can request the casino to hold back charges, and they normally comply. But then again, while it isn’t an obligation for the gaming site to subtract any taxes from your earnings, the house will have to deduct 28% of the sum for the IRS in case you don’t give details of your Social Security number.
What if you earned over $5,000? Well, in this case, you might be bumped up to a much higher tax bracket since the IRS will take this as part of your income. So, for massive wins, you may end up paying up to 40% in taxes from your payout. And for all sums, foreign winners will pay higher amounts in taxes.
How Will You Receive Your Money?
Well, most online gaming companies give their winners two options of cashing out huge winnings; and by the way, your ultimate cashing out choice will impact the taxable deductions. So, you have to make a smart move here if you want to retain more of your money!
After you win, you will have between 60 and 90 days to decide whether you want to cash out the entire amount of money or you would like to receive the cash in portions over some years. Depending on what you decide, here is how things will play out.
In this case, you will receive your winnings in equal portions annually for a specific number of years. For IGT games, for instance, the lifetime payout periods is set at 25 years. This means that if you landed on say a $50 million jackpot, you will end up getting $2 million in annual payouts and then a deductible of 40% in taxes year after year. This is always the better option in case you’re trying to get the largest payment probable because, at the end of the day, you will have walked away with at least $30 million total. Furthermore, it makes the management of cash much easier and in certain circumstances, decreases your tax bill.
Lump Sum Payout
Choosing to get paid the entire amount once means that you will end up dealing with a massive interest rate. After that interest, you will end up with only 60% of the initial amount you won. And again, from that 60%, another 40% will go to taxes! So, from a lump sum of say $50 million, you’ll retain $30 million, and after you pay your taxes, what will remain after a 40% deduction is only $18 million! Patience pays, right? With a lifetime payout, you’ll end up having close to double the amount of a lump sum cash out!
24 Hour Payment
And before we forget, on many gaming sites, the casino usually pays out 5% of the jackpot cash to the winner within 24 hours. Usually, this is done to allow you to have some more money to gamble as the other technicalities are completed.
In rare cases, two players may end up hitting the same jackpot at the same time. Moreover, other gaming sites stipulate the number of minutes apart that wins can be considered a tie for two players. For such cases, hitting the jackpot up to 3 minutes after someone else has won it will mean that it’s a tie. Once it’s declared a tie, the two winners will go through the above procedures as well.
All in all, you must pay extra attention whenever you want to play any type of jackpot-awarding game online. There will always be rules that come with for each game offering a jackpot, and those rules are the ones that will eventually determine how and when you’ll win a jackpot. If you’re playing a slot machine which has a progressive jackpot, for instance, look at the paytable and understand the kind of combination that is required to unlock the jackpot sum. Typically, you may have to play all the paylines at a go with maximum bets. Remember, some online casinos may even bar you from taking part in a jackpot game if there are some bonus wagering requirements that you haven’t fulfilled yet. And finally, each jurisdiction usually comes with it’s on taxation laws on gambling income. Thus, make sure that you confirm with the relevant institutions in your country so that you can do your math right.
If you won a jackpot today, would you receive all the cash at a go or wait for over 20 years to get it in much smaller chunks? We would love to know!