The following Notice has not been approved by any government
official. (In fact, some of them would probably be unhappy to see
this warning published.)
WARNING TO ALL CASINO PATRONS:
If you win big, are a high roller, or do anything that a
casino or the government regards as suspicious, you will be reported
to the U.S. Treasury Department's Financial Crimes Enforcement
Network, commonly known as FinCEN. The information will be made
available to the IRS and your local law enforcement agency. Expect
your taxes to be audited. If you are ever involved in a messy
lawsuit, your opponent may be able to obtain some of this
information by subpoena, to show, for example, how much cash you
used for gambling. The casino will not always tell you when it
files these reports; in fact, under some circumstances, it is not
allowed to let you know that you have been reported to
Scary, isn't it?
All businesses are supposed to report cash transactions over
$10,000. But only "financial institutions" are required to file
detailed reports and have compliance programs in place to make sure
the reports get filed. And only "financial institutions" have to
report "suspicious activities" involving more than $3,000 to FinCEN.
It may come as a surprise to most players and even executives in the
gaming industry that large casinos and card clubs have been defined
as "financial institutions."
It will certainly be a shock to most players to learn that they may
be the subject of secret reports filed by casinos with the federal
All casinos and card clubs with gross annual gaming revenues in
excess of $1 million must file Currency Transactions Reports (CTRs)
with the federal government every time a player has a cash
transaction of more than $10,000. This includes players using
currency to buy chips, deposit front money, pay off markers, make
large wagers or collect large winning bets.
The last is particularly interesting, because the original purpose
of CTRs was to track crooks who were using casinos for money
laundering, like a drug dealer who bought gaming chips with $25,000
in small bills, made a few token bets, and then asked for a
cashier's check for his remaining chips.
In the mid-1980s Nevada officials, including its then-powerful
Republican senators, convinced the federal government that there was
no need for casinos to file CTRs when the cash was paid by casinos.
Nevada enacted Regulation 6A, which required casinos to file CTRs
only with the state, and only for transactions that might involve
dirty money, like cash buy-ins or marker payments.
But Nevada gaming officials, apparently at the request of the
federal government, changed the rules in 1997. All currency
transactions of more than $10,000, even slot jackpots paid out in
cash, now have to be reported. And today CTRs are filed with the
IRS, not with the state.
The U.S. Congress, which is supposedly the body that actually
makes the laws, had established complicated rules for withholding
taxes of gambling winnings, but only under special circumstances.
For example, a sports book has to withhold 28 percent of the amount
won, but only if it is more than $5,000 and at least 300 times as
large as the amount bet.
For years the IRS has gone further by requiring casinos to report
big wins at bingo, slot machines and keno, even though no money was
withheld for taxes.
Today, a CTR must be filed on every patron who cashes out for
more than $10,000 in currency -- no matter what the game and even if
the player has lost money gambling.
The regulations also used to require that casinos obtain
identification from the player before filing a CTR.
Today, a casino does not have to ask for a player's i.d. if it
already has the patron's name, address and similar information.
This eases the casinos' workload and prevents disruptions. But it
also means high-rollers do not have to be told when the casino files
CTRs with the IRS.
The reason for the changes is simple: The Treasury Department
has admitted that one of its primary goals is to go after untaxed
cash transactions that have nothing to do with money laundering.
But Treasury still wants to catch drug dealers. So, it has taken
the next step: A Suspicious Activity Reports - Casinos or SARCs, to
be filed with FinCEN.
As this is being written, only Nevada casinos have to file SARCs,
although FinCEN intends to require all casinos and card clubs to
report suspicious activities.
What exactly is a a suspicious activity?
The amount does not have to be more than $10,000; a total of
$3,000 or less can trigger a report. Nor does it have to involve
FinCEN likes to say the standard is know your patron. But the
actual regulation is more vague, including phrases like a casino
employee has reason to suspect that the transaction has no business
or apparent lawful purpose.
Casinos face large fines if they fail to report suspicious
transactions, and they cannot be sued for filing SARCs when players
were doing nothing wrong. So, when in doubt, casinos will err on
the side of filing reports on their patrons.
It is against the law for a casino to tell a player that it has
reported his suspicious activity to FinCEN.
This might catch more crooks. But it is hard to picture casino
executives as secret police.