What Happens if You Win a Jackpot at an Online Casino?

It is a moment you have imagined a thousand times. You select your coin size, you pull the virtual lever, and you watch as the reels spin. Two symbols line up on the payline, then another, then another, then another…

For a moment, you think your eyes must be lying to you. But no—you blink a few times and the symbols are all still there on the payline. And you have just won a massive jackpot.

At this point, you probably leap forward to a few years in the future in your imagination. You’re out on the deck of your private yacht, sipping a margarita and relaxing in the sea breeze. You will never have to do a hard day’s work ever again. Any work that does need to be done will be handled by your maid.

Let’s wait a moment before we start hiring the help.

But let’s backtrack a bit to the actual moment where you win a huge jackpot at an online casino. What actually happens next?

The reality is that you are not going to jump straight to the yacht and the margaritas. There are some administrative and financial matters you are going to need to get sorted out before you start living your millionaire lifestyle.

First, you need to verify that you have in fact won.

Winning a jackpot is obviously a big deal. So the first thing you should do is contact customer service to have them provide you with verification. You may not need to reach out at all though; there is a good chance that someone on staff will connect with you directly.

Next, the online casino is going to issue you a tax form.

You didn’t think that you were going to get to keep all of that money, did you? This is a reality which is overlooked all the time in movies and TV shows. When someone wins a jackpot or a prize in a film, they always get exactly the amount of money they need to resolve some financial crisis as part of the plot.

But in truth, most of those characters would not get the money they needed in time, because a large chunk of their winnings would go right to Uncle Sam (or the applicable tax authority in their country).

So let’s say you are a citizen of the USA, and your slot or bingo jackpot exceeds $1,200. At this threshold, you owe taxes on your winnings. If you win on keno, the threshold is a little higher at $1,500.

At this point, the online casino will issue tax form W-2G. This form is sent both to you and to the IRS. You can check the form to see what the casino reported in terms of winnings. That way you can make sure that your own taxes are consistent when you pay them. If there are inconsistencies between what you submit and what the online casino submits, it could result in an audit.

Currently, winnings from gambling are taxed at a 25% flat rate. So say you won a million-dollar jackpot. That means that $250,000 of that jackpot is going to Uncle Sam. You only get to keep $750,000 (but don’t knock it–$750,000 is still a lot of money).

Now, you might be able to offset some of that by taking itemized deductions. Do this and you can deduct your gambling losses, up to the limit of the amount you have won. Here are a few important things to know:

  • You must report all your gambling winnings for the year. That may include more than just the big jackpot, so do not forget about the rest.
  • The IRS expects you to pay taxes on money you won offline as well as online.
  • Both cash and non-cash winnings are taxable. So if you won a new automobile in a slot tournament, you have to report its fair market value as part of your income, and pay taxes accordingly.
  • If you are receiving the payments in installments (more on that later), do not forget that you will continuously need to set aside taxes for the IRS.

If you find this process confusing, the best thing to do is to hire a qualified tax preparer to assist you.

You will need to select a payment method.

Once your win has been verified and the casino has submitted its Form W-2Gs, it will be time to figure out a payment method. In some cases, this may be decided for you—the casino may only have one method it is willing to use, but in other cases, you may be given some options.

For the most part, you can expect the options to be limited to those which are least expensive in terms of fees and also the most secure. So you probably will not be allowed to have the money sent to your e-wallet, for example. But a transfer to your bank account should work fine.

Decide how you want the money disbursed.


When it comes to getting your money, there is also another matter to consider, and that is timing. Here too you may or may not be given a choice. You may only be able to have the money sent to you in installments, or you might have the option of receiving a lump sum.

Which should you choose? That is totally up to you, but do not assume that the annuity is a less convenient option. The idea of having all of your money right now probably sounds most appealing, but that does not make it the wisest decision. There may be tax savings if you allow the casino to pay you in installments. Plus, you are less likely to blow through the money overnight if you do not get it all at once.

Find out how long you have to make your decision; often you will have a few weeks or even months to make your choice.

Again, you do not always get a choice. If you check the terms and conditions for the casino where you are playing, they may well stipulate the maximum sum per year that they are wiling to pay out. If there is such a term, you will be stuck with that cap regardless of how much you have won.

Wait as the casino takes care of its paperwork.

Speaking of taking your time, the casino will be taking its time as well. When you request to withdraw your jackpot, there is a lot of accounting which needs to take place on the casino’s end. They are going to make sure they get it right, which means doing a lot of paperwork and double-checking.

How long will you be waiting? That depends entirely on the site and the amount you have won, as well as your personal and payment details. It might take days, or it might take weeks. You can ask for an estimate when you talk to customer service following your win.


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Start receiving your money.

Eventually, you will actually get the money you have won, whether as a lump sum or as an annual payment. This of course is the super exciting part. Now that you have the formalities out of the way, you finally have the cash.

If you look up stories about people who have won jackpots and lotteries, you will find that those who have managed to go broke again within a short time (often within just a few years) are a dime a dozen.

For that reason, you need to put a lot of thought into what you do next. The hard work isn’t actually over. If you do not have a plan, you will end up right back in the poor house, especially if you give up your job beforehand.

Remember that you need to set aside the taxman’s cut. If you receive a lump sum, you will do this once. If you are paid annually, you will be doing it every year. It will be a hassle the first time you do it, but after you learn how it works, it should be much faster and easier in future years.

Expect changes in your interpersonal life.

“Hey. It’s me. Your long-lost uncle you’ve never heard of!”


The next thing to be aware of has nothing to do with the casino where you played at all. It has to do with the people who are directly around you. That includes your family, friends, co-workers, acquaintances, and business associates. In some cases, it may even include strangers.

Winning a meta jackpot will change how other people perceive you and interact with you. You probably will not entirely escape this with regards to anyone in your life. Even those who treat you the same will probably be making a conscious effort to do so.

In a lot of situations, this can turn into a negative. On one hand, you will have to deal with old friends or family members suddenly coming out of the woodwork—and wondering if they are only there for a handout. On the other hand, you will have to make evaluations and decide who you want to help out financially. That may mean acknowledging your own lack of regard for some of the people in your life.

In any case, you will need to figure out your interpersonal priorities and what you can and cannot afford—and who you really value, and who really values you. That is not an easy task, and it takes time.

If you have won a really massive jackpot, you may want to take steps to protect yourself from predatory behavior. There are people out there who will want to take advantage of you, so try not to advertise your newfound riches to people you meet.

Be prepared for the psychological fallout of a sudden windfall.

Winning a jackpot in and of itself is a major positive life change. When you daydream of winning millions of dollars at an online casino, you probably envision that it will bring nothing but joy and contentment to your life.

In theory, that should be true. But in reality, there are a lot of reasons why you might psychologically end up struggling to process a major win.

First of all, there are the aforementioned social issues. Secondly, you may have a hard time reframing your reality. If you have been struggling financially your whole life, it may be hard to accept that times have changed. Thirdly, change is always a disruptor. Even when it is for the better, it can still be stressful.

What is the best way to cope? Plan to sit on the money for the first year without spending it (unless there is an emergency). During that time, do some hard thinking about what is important in your life (see below). Take some time to adjust mentally to the idea that the money is there. Only when you have overcome the initial shock should you start spending it.

Come up with a plan to budget the money.

For some people, budgeting comes naturally. If you have spent years budgeting your way through poverty, you may never actually get to the point where you feel “safe” financially, even with millions of dollars in your possession (sometimes referred to as a “Depression-era mindset”).

For others however, the opposite is true. With that windfall comes a sudden feeling of complete security—even invincibility. People with this frame of mind will often splurge right at the onset. They will go out and buy a new home, a new car, a new yacht, and so on, as quickly as possible. These are the people who usually wind up broke not long later.

So think carefully about how you should spend the money, and how much you want to save. These days, a lot of people do not even have a basic financial safety net—a few month’s rent stockpiled for hard times. Think about essentials like this first.

Consider setting aside enough to retire on, and then thinking about other necessities such as health needs and so on. Once you have those basics out of the way, you can take a look at how much you have left. From there, you can start looking into things which are wants as opposed to needs.

Let’s take a practical example. Say you have just won $1 million from an online slot machine.

First, take $250,000 out right off the top. That is going to the IRS.

This leaves you with $750,000.

Say you do the math and you discover that you can retire with a reasonable degree of comfort at age 62 if you set aside another $300,000.

Put that $300,000 aside for retirement and do not touch it.

This leaves you with $450,000.

Now you can start divvying up that $450,000 for necessary expenses. It could look like this:

  • $100,000 set aside for medical expenses.
  • $40,000 set aside for your child’s college expenses.
  • $40,000 set aside for various emergencies (automotive repairs, funerary expenses, home upgrades and repairs, etc.).

You now have $270,000 left for personal expenses.

You can see now why it was important to put some planning into budgeting before running out and putting a down payment on a mini-mansion or a fancy sports car. If you had done that right away, you might have eaten into the money you are going to need just to get by. You could even find yourself with debt.

You can also see why it is wise not to just up and quit your job. If you did that, you would burn through the winnings well before reaching retirement.

With the remaining $270,000, you can look into buying houses, cars and so on, with a much better idea of what you can truly afford. It will probably be a lot more modest than you thought.

Alternately, you could put that money toward retirement and stop working earlier. You could also consider investing some of the money. This may help you leverage your jackpot for even greater gains. You will need to decide what is most important to you concerning your lifestyle.

Enjoy your new lifestyle.

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You may not own that mansion and yacht yet, but life will be more fun.

I have attempted here to provide a bit of a reality check concerning what you can expect if you win a jackpot online. In your imagination, you probably have envisioned all of your problems evaporating in an instant. In reality, that is not going to happen, though your life should get much better if you manage your funds with care.

Essentially, winning a million-dollar jackpot means that you can feasibly live a comfortable life. You will probably have to keep working at your traditional job for some length of time, and you probably will not live in a huge mansion.

But when you think about it, just living comfortably isn’t the easiest thing to do in today’s world. Since the recession, more jobs have been added to the economy, but most of them do not pay enough to live on. Rents are rising with a housing crisis affecting the entire west coast.

Many people are unable to pay their basic bills or cover health expenses. Soon, automation will make even more jobs disappear. A lot of people will never be able to retire.

So when you consider that a million-dollar jackpot may allow you to retire in comfort while alleviating much of the financial stress that you are enduring day by day now, suddenly you realize that it is still a really big deal—even if it is not what you were picturing.

Winning a Huge Jackpot Online Can Change Your Life, But How It Will Change Your Life Depends On You

If you win a massive jackpot, you are incredibly lucky. It isn’t something which happens to a whole lot of people.

That is something to keep in mind when you are handing over 25% of your winnings to the IRS. The amount you have actually won may be less than the amount of the jackpot—and it may not go as far in today’s world as it would have a few decades ago.

But in a way, this actually makes you all the more fortunate. In a time when even middle income people are often struggling to scrape by, you have a chance to live with far greater security, freedom and comfort.

How far your jackpot winnings go and how much value they bring to your life ultimately depends on the choices you make. So think carefully about how you want the money disbursed and how you will budget and spend it once you have it in your possession. If you are wise with your choices, your jackpot winnings can bring enduring and dramatic positive changes to your life.

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Photo credits – Maid, by Pierre Gouvernante

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