My stakeholder liaison at the IRS got back to me this morning and told me that the IRS has indeed sent letters to “several large casinos” ordering them to cease and desist issuing Individual Taxpayer Identification Numbers (ITINs). She was told by an IRS Attorney involved in this issue that:
Language in the PATH Act states that, “ITIN applicants residing outside of the United States must submit an application by mail or in person to the IRS (or to a consular officer). [emphasis added]”
This left no wiggle room for the IRS (in their view); thus, the letters to the casinos. Although no specific casinos were identified to me, the implication is that all casinos that had been authorized to issue ITINs have received the letter. It is a certainty that impacted casinos have either stopped issuing ITINs or will soon cease doing so.
The liaison also confirmed that a technical corrections bill is somewhere in the Congressional stream. This could mitigate this issue if it’s signed into law in the next couple of months. However, given the acrimony we’re seeing out of Washington I’m not holding my breath on that happening anytime soon.
This means it is close to a certainty that non-Americans who do not have an ITIN and are from tax treaty countries  will face 30% withholding on tournament winnings of more than $5,000, including at this summer’s World Series of Poker (WSOP). The earlier Twitter comments from the WSOP are simply wrong. Impacted individuals can eventually get their money back (by filing a Form 1040NR after year-end along with an application for an ITIN); however, any impacted players will wait months to get money back that they should not have had withheld in the first place.
Should a technical corrections bill show some progress I will post on it.
 As noted in Publication 515, “Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.”