I love the politicians who stump for "no invisible tax" and write legislation to ensure that gasoline pumps break out every tax category on the paper receipt (we still have these in Canada, I can't speak for anywhere else).
Everybody knows the deal going in.
I sure wish we'd apply the "no invisible tax" standard to casinos, as well. In this world, every patron is entitled to a printed receipt on the way out (just stick your card into the receipt printer near the main exit) of total $$$ in bets placed and total $ in winnings returned.
Even better if those same receipts enumerate the proportion of your losses that wind up in the government's pocket.
7 Facts about Gambling Winnings in the US
Riddle me this, Batman: how does an activity with a guaranteed amortized loss end up pay tax to Uncle Sam on aggregate negative proceeds?
John, a German national, travels to Las Vegas on holiday. He wins a single $10,000 jackpot on the slot machines while playing at Caesar's Palace, triggering the creation of form W2-G by the casino, a copy of which is given to the player. He also wins $1000 more in various slot machine wins, none of which trigger the creation of form W2-G. When John wins the $10,000 jackpot, he hands the slot attendant his German passport along with Form W8-BEN. The slot attendant processes the form and no withholding is taken from the $10,000 jackpot. At the end of the calendar year, John will need to file Form 1040NR with the IRS and report the $11,000 of gambling winnings. He will attach Form 8833, reporting his use of the treaty position to make the gambling winnings non-taxable in the US, along with a copy of the Form W2-G he received from the casino. John will only need to file Form 1040NR in the years that he has US sourced income.
I understand taxing proceeds in a game of skill like poker, but freaking slot machines? Ludicrous. Beyond insane. Conceptually criminal.