Sweepstakes or social casinos may have tricked the anti-gambling laws in the US by simply selling their product in a different way; unfortunately the taxman will still follow.
So, for people who don’t know how Sweepstakes work. It’s basically just like any other online casino, but with a twist. You basically buy coins using real money. Then you can play the slot titles provided by such social gambling platforms, for free. Your “volume” of gaming then generates a “free bonus” they call “Sweeps” or coins, that can be exchanged for cash or gift cards.
This way, the casinos can technically circumvent the US gambling laws (not sports betting but anti-casino), since the money isn’t being directly used to play the slot machines.
However, as one Redditor pointed out, this still does not mean that you wouldn’t have to pay taxes on your winnings. You will have to because all the popular brands in the social casino industry have started issuing 1099-MISC tax forms to people who are withdrawing more than $600 in winnings. Since it’s not considered a gambling win, otherwise you would been issued a W2-G form, which could be used to offset your gambling losses.
So the OP wanted to make list of Sweepstakes casinos that issue the 1099-MISC form to their players.
Anyways this is what the user said:
For those of you unaware, there are several dozen online casinos that operate in the grey zone of being “Sweepstakes” casinos. The premise is that you are buying non value coins for online free play and they give you “Sweeps” coins as a “free bonus”. You can usually cash these out for a 1-1 US dollar value. Every slot spin or game play is considered a “sweepstakes entry”. If you cash out more than $600 in a calendar year they can issue you a 1099-MISC which (unlike a W2-G) can not be offset by gambling losses. It’s treated like you won a car from a charity raffle. As many of these casinos are located outside of the US, they do not issue tax forms. As I could not find a comprehensive list of the ones that do, I thought it would be beneficial to start one here. I know that chanced.com, modo.us and high5casino.com DO issue these. (TLDR: If you buy in for $600+ and cash out for $600+, you’re going to get a tax form for $600+.)
A Redditor posted an interesting reply, stating that he recently won $20K at Modo, and now he owes something like $4k just in taxes. Had he known that he would not have played there.
Another thing that’s bothered the posters in this thread was the fact that most of these social casinos were based outside the US, and pretty much operated like how the offshore casinos do. Yet, they tend to follow the US tax laws as if they were locally licensed.
By the way, going slightly off-topic, if you want the real-deal kind of escape, I would suggest checking out my review of Wild Casino, where I personally won and lost $11k. It’s not a social casino, but then again, it’s all gambling anyway.
So far the list of social sweepstakes casinos that require a 1099-MISC tax form for withdrawals over $600 are:
- chanced.com
- modo.us
- high5casino.com
- goldenheartsgames.com
- SunSpin.us
The list was curated by Redditors in that thread. I’m sure, there’re more.
So, if you thought that social casino wins would relieve you of taxes in the US, well, they wouldn’t.
But, at least now you know.