Casino Winnings and Annuity Payments

Winning big at the casino often comes with a decision: take all the money as a lump sum, or place the winnings into an annuity. There are major differences between the two options, making it a decision that deserves careful thought and attention.  

What Are My Casino Payout Options?

Depending on the amount won and the casino’s policies, you have two options to receive your casino winnings:
 
  1. Lump Sum - Receive the entire amount of your casino winnings immediately in one lump sum payment. Choosing to take a lump sum means the full amount will be taxed according to applicable income tax laws for the year your winnings were received. Additional casino withholdings may apply. 
  2. Annuity - Put the money into an annuity to be paid out in regular, scheduled payments over a designated period of time. The money is only taxed when the payments are disbursed, meaning the entire amount of the annuity can generate interest over time to help subsidize tax requirements.  

How Do Casinos Pay Out My Winnings?

A particularly successful night in the casino could mean your winnings are subject to different forms of payout per specific casino policies. In some instances, you will have more control over the disbursement method than others. 
 
  • Most games allow for a lump sum payment.
  • Certain games and large sums of winnings require an annuity.
  • It all depends on the casino, the games played, and the amount won.

The best way to be sure about your choices is to check with the casino and verify your options if you have won a large amount of money by playing a particular game.

Are My Casino Winnings Taxed?

Casino winnings are often taxed. Depending on the amount won and the games played, you should be aware of the following regulatory standards: 
 
  • Lump sum payouts of $5,000 or more are subject to income tax and may  bump winners up to a higher tax bracket. Check with your particular state for regulations regarding gambling taxes.
  • The IRS also taxes gambling winnings; a W2-G tax form will need to be filled out come tax season if your winnings exceed these minimum thresholds:
  1. $600 at a horse track — if you have won 300 times your bet or more.
  2. $1,200 from a slot machine or game of bingo.
  3. $1,500 in Keno winnings.
  4. $5,000 in poker tournament winnings.  

The casino typically withholds up to 25% of your winnings if the amount surpasses these thresholds. 

Important to note: You should consult with a professional tax advisor for tax advice and information related to your specific circumstances. 


Annuities vs. Lump Sums for Casino Winnings

Placing your casino winnings into a structured annuity or taking the lump sum payout both result in a guaranteed payout of the amount you won, but there are major differences in how the money is paid to you. 
 
  • Taking the lump sum payout means you will be responsible for paying income tax once, and only once, on the entire amount of your winnings. 
  • Annuity recipients are taxed on each scheduled payment according to federal income tax regulations at the time of the disbursement.
  • Opting for an annuity allows you to place the entire amount into a structured settlement where it can generate interest over the life of the account. 

 

How Do I Sell Annuity Payments From Casino Winnings?

Annuity payments from casino winnings can be sold if certain criteria are met. If you wish to sell your annuity payments, you must do the following:
 
  1. Contact a J.G. Wentworth Representative
  2. Receive a Quote for Your Annuity Payment Sale
  3. Agree to and Accept the Lump Sum Offer for Your Payments
  4. Receive Court Approval for the Transaction (if applicable in your state)
  5. Receive Your Money in a Lump Sum

Get A Quote

If you are considering selling annuity payments from your casino winnings, selling lottery payments, or you simply want to learn about the other payment purchasing options provided by J.G. Wentworth, please contact us today. We offer free, no-obligation quotes for selling annuity payments from casino winnings. 

 

J.G. Wentworth is a purchaser of assets and does not provide legal, tax, or financial advice. Please consult with independent professionals for such advice. All transactions are at J.G. Wentworth’s sole discretion.

1. Ritchie, J. (2017, May 6). How Are Gambling Winnings Taxed? https://blog.turbotax.intuit.com/income-and-investments/how-are-gambling-winnings-taxed-8891/

 


 

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