From a strict standpoint, there are two separate events here: you
receive "Free Play", which has a value of the EV of the game you can
use it on X the face value of the free play. Then, you run it
through the machine, and you realize a net gain or loss. For
example, let's say you were playing something crappy like 7/5 Bonus
Poker. $100 in Free Play at this 98% game is worth $98. If you then
cash out, say, $120, you have a gain of $22. This is important from
a tax standpoint because the "Free Play" may have been "earned" via
playing negative EV games, or as partial compensation for a loss. If
you received that $100 in Free Play from having a long losing
session where you were, say, -$1400 (whether it came in the form of
bounceback cash, or was earned directly by point accumulation)
when you cash out that $120, you HAVEN'T MADE $120. This is even
true if the earlier loss was in a previous calendar year; you simply
adjust your loss figures from that previous session to the NET loss
when considering the Free Play earned.
Of course, such scrupulous record-keeping would also presume that
you should report Free Play earned during a WINNING session as added
on to that session's win totals. The point I am trying to make is
that Free Play, or other kinds of bounceback cash, does not appear
out of the blue, and should be considered as earnings from PREVIOUS
sessions.
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