According to the latest IRS news release, beginning March 4, 2008 all casinos and sponsors of poker tournaments will be required to report money awarded to winners. In recent years, there had been confusion about whether sponsors were required to report winnings to the IRS or not. By law, all tournament winners are required to report all winnings on their individual federal income tax returns, regardless of the amount. However, because many sponsors and casinos were not reporting the winnings to the IRS, many winners had been paying little or no taxes on their winnings.

Beginning in March, all casinos and poker tournament sponsors will be required to report winnings of more then $5,000, usually on an IRS Form W-2G. Sponsors who comply with the reporting requirement will not need to withhold taxes at the end of a tournament. However, if a sponsor does not comply the IRS will enforce the new reporting requirement and require the sponsor to pay any tax that should have been held from the winner if the withholding requirement had been asserted. Typically, the withholding amount is around 25% of amounts that should have been reported.