The Association of Gaming Equipment Manufacturers (AGEM) has disseminated an advisory letter to industry participants, clarifying the ramifications of new federal tax reporting thresholds concerning gambling earnings, following amendments introduced under the One Big Beautiful Bill Act (OBBBA). These enhancements officially commenced on January 1, 2026, marking the inaugural modification of particular federal reporting benchmarks in several decades.

According to the updated legislation, the threshold for reporting gambling winnings via Form W-2G has been raised from $1,200 to $2,000, with provisions for future adjustments based on inflation. This modification aims to streamline tax compliance and align with the present-day realities of gaming operations, while alleviating administrative pressures on both operators and participants.

In a letter dated January 5, AGEM indicated that the revamped thresholds signify a forward progress for the regulated gaming sector, but emphasized the critical need for transparent communication and synchronized implementation among suppliers, operators, and regulators. The association expressed its full backing for the American Gaming Association’s (AGA) initiatives to partner with the U.S. Treasury Department and the Internal Revenue Service (IRS) regarding the enactment of these new guidelines, encompassing rulemaking, guidance, and revised tax forms.

AGEM expressed satisfaction with the IRS’s distribution of a draft 2026 tax withholding form in December 2025, deeming it an essential milestone in the implementation trajectory. Nevertheless, the supplier organization warned that additional regulatory measures may be needed throughout 2026 and subsequently, especially since inflation adjustments and prospective legislative updates may continue to increase the reporting threshold in the coming years.

Despite these federal developments, AGEM pointed out that many states and local jurisdictions have not yet aligned their regulations with the new $2,000 threshold. Numerous states still impose withholding and reporting requirements at the previous $1,200 level, either through statutory or regulatory mandates, which may involve obligations related to child support enforcement and various public policy considerations.

“As of now, none of these amounts have been revised or updated, thus licensed suppliers remain bound to comply with the existing reporting thresholds until they are amended, irrespective of the changes instituted by the Act,” stated AGEM.

The association noted that this regulatory inconsistency generates operational complexities for gaming suppliers, many of whom face the necessity to modify software and hardware across numerous jurisdictions, each possessing unique compliance requirements. AGEM urged operators and regulators to actively communicate their expectations and timelines to supplier partners, allowing adequate time for testing, certification, and regulatory clearance of system updates.

“Considering the scale, depth, breadth, and ramifications of these impending alterations, it is likely that unintentional mistakes or oversights may arise throughout this multifaceted process,” AGEM declared, advocating for a collaborative and practical attitude from regulators as the industry adjusts. The organization encouraged all parties to work jointly throughout 2026, rather than treating implementation obstacles as opportunities for enforcement.

The AGEM correspondence builds upon advocacy initiatives spearheaded by the AGA, which has consistently contended that the $1,200 slot jackpot reporting limit—unchanged since 1977—has failed to adapt to inflationary trends. In a preceding communication directed to Treasury and IRS officials, the AGA underscored that the inflation-adjusted equivalent of the original threshold would surpass $6,600 today, and that outdated limits have imposed unwarranted compliance pressures on casinos, regulators, and the IRS itself.

While both AGEM and the AGA regarded the increase to $2,000 as a significant advancement, they continue to advocate for mechanisms that facilitate future updates to preempt the threshold from becoming antiquated. Industry groups reaffirmed their readiness to provide technical expertise and practical insights to federal agencies as the implementation progresses.

In conclusion, AGEM reiterated its dedication to acting as a resource for regulators and operators, united in the objective of bolstering the U.S. regulated gaming industry and ensuring that the advantages of the new law are realized with minimal disruptions.