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Taxes on Gambling and Sports Betting: How They Work, What’s Taxable
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Expertise Cryptocurrency investing alternative assets taxesAndy Rosen is a former NerdWallet writer who covered taxes, cryptocurrency investing and alternative assets. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas. In these roles, Andy has seen cryptocurrency develop from an experimental dark-web technology into an accepted part of the global financial system. He is based in Boston.
Andy Rosen is a former NerdWallet writer who covered taxes, cryptocurrency investing and alternative assets. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas. In these roles, Andy has seen cryptocurrency develop from an experimental dark-web technology into an accepted part of the global financial system. He is based in Boston. Published in Lead Writer/Spokesperson + more + more
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Expertise Taxes InvestingSabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.
Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York. Published in Editor & Content Strategist + more + moreAs online sports betting rolls out in more states, people are encountering legalized gambling in new ways. Whether you're wagering on March Madness from your couch or flying to Las Vegas for a weekend at the tables, understanding the tax implications is key.
As online sports betting rolls out in more states, people are encountering legalized gambling in new ways. Whether you're wagering on March Madness from your couch or flying to Las Vegas for a weekend at the tables, understanding the tax implications is key.This year, there are also new rules to navigate. One of the quieter changes tucked into the "One Big, Beautiful Bill Act" (OBBBA) is a new way of reporting deductions on gambling income. In contrast to previous years, filers can now only write off 90% of their losses, which might mean a surprise tax bill for some in 2027.
This year, there are also new rules to navigate. One of the quieter changes tucked into the "One Big, Beautiful Bill Act" (OBBBA) is a new way of reporting deductions on gambling income. In contrast to previous years, filers can now only write off 90% of their losses, which might mean a surprise tax bill for some in 2027.Do you have to pay taxes on sports betting?
Do you have to pay taxes on sports betting?The IRS has clear-cut rules on gambling income that predate the recent explosion of the sports betting industry. In short, the proceeds from a successful sports wager are taxable income, just like your paycheck or capital gains from investment income.
The IRS has clear-cut rules on gambling income that predate the recent explosion of the sports betting industry. In short, the proceeds from a successful sports wager are taxable income, just like your paycheck or capital gains from investment income."The U.S. tax code is very broad in how it defines what is taxable. Everything that you earn is taxable unless it is otherwise said not to be," says April Walker, lead manager for tax practice and ethics with the American Institute of CPAs.
"The U.S. tax code is very broad in how it defines what is taxable. Everything that you earn is taxable unless it is otherwise said not to be," says April Walker, lead manager for tax practice and ethics with the American Institute of CPAs.While you can write off some gambling losses if you itemize, that deduction can't exceed the amount of your winnings.
While you can write off some gambling losses if you itemize, that deduction can't exceed the amount of your winnings.» MORE: See the 2025 federal tax brackets and rates
» » » MORE: MORE: MORE: See the 2025 federal tax brackets and rates AD Owe $10,000+ or More? This Tax Season Could Be Your Chance to Qualify Each year the IRS writes off millions in tax debt, yet few have applied. Learn moreon Anthem Tax Services' website
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What is Form W-2G?
What is Form W-2G?Gambling establishments, including digital operations such as online sportsbooks, usually provide you and the IRS with a record of your taxable winnings.
Gambling establishments, including digital operations such as online sportsbooks, usually provide you and the IRS with a record of your taxable winnings.The statement is known as the W-2G, and it includes an overview of your gambling winnings, along with any withholding you elected when you gave the establishment your tax information
The statement is known as the W-2G, and it includes an overview of your gambling winnings, along with any withholding you elected when you gave the establishment your tax information Internal Revenue Service. Instructions for Forms W-2G and 5754. Accessed Jan 29, 2024. .Gambling businesses are required to report payouts they made that meet certain thresholds, according to the IRS. You'll likely receive one or more W-2G forms if you:
Gambling businesses are required to report payouts they made that meet certain thresholds, according to the IRS. You'll likely receive one or more W-2G forms if you:Won $1,200 or more playing bingo or slots.
Won $1,200 or more playing bingo or slots.Netted $1,500 or more from keno.
Netted $1,500 or more from keno.Exceeded $5,000 in winnings from a poker tournament.
Exceeded $5,000 in winnings from a poker tournament.Obtained $600 or more in another gambling endeavor, such as sports betting, and the payout was at least 300 times the amount you put on the line.
Obtained $600 or more in another gambling endeavor, such as sports betting, and the payout was at least 300 times the amount you put on the line.Businesses are typically required to send you Form W-2G by Jan. 31 of the following year. This year is a little different: Since Jan. 31 falls on a Saturday, the deadline was pushed to Feb. 2. Regardless, you should expect to receive your W-2G no later than mid-February.
Businesses are typically required to send you Form W-2G by Jan. 31 of the following year. This year is a little different: Since Jan. 31 falls on a Saturday, the deadline was pushed to Feb. 2. Regardless, you should expect to receive your W-2G no later than mid-February.» Questions on lottery taxes? Use our lottery tax calculator
» Questions on lottery taxes? » Questions on lottery taxes? Use our lottery tax calculatorAre all gambling winnings taxable?
Are all gambling winnings taxable?It's worth noting that these requirements don't cover every potential situation in which you might win a bet. For instance, your winnings might be below these thresholds, but be mindful that you're supposed to pay taxes on anything you win. So if you get a W-2G, you can be sure the IRS knows about whatever the casino or sportsbook has listed there.
It's worth noting that these requirements don't cover every potential situation in which you might win a bet. For instance, your winnings might be below these thresholds, but be mindful that you're supposed to pay taxes on anything you win. So if you get a W-2G, you can be sure the IRS knows about whatever the casino or sportsbook has listed there.Similarly, the coworker who organized your office bracket pool is unlikely to send you and the IRS records of your participation.
Similarly, the coworker who organized your office bracket pool is unlikely to send you and the IRS records of your participation.How do you deduct gambling losses?
How do you deduct gambling losses?You can deduct gambling losses, but there are some important limitations to be aware of.
You can deduct gambling losses, but there are some important limitations to be aware of.First, writing off your gambling losses requires that you itemize on your tax return. In practice, many taxpayers benefit more from taking the standard deduction, which is simpler and doesn't require tallying up individual expenses.
First, writing off your gambling losses requires that you itemize on your tax return . In practice, many taxpayers benefit more from taking the standard deduction, which is simpler and doesn't require tallying up individual expenses.The second challenge is a rule change that will affect 2026 gambling activity that you'll report on your 2027 return.
The second challenge is a rule change that will affect 2026 gambling activity that you'll report on your 2027 return.In the past, gamblers could generally deduct 100% of their losses up to the amount of their winnings, meaning that if you broke even, you typically didn’t owe taxes on your gambling activity. Beginning this year, a new provision in the OBBBA limits the deduction to 90% of gambling losses. That change could lead to an unexpected tax bill on what amounts to unrealized income.
In the past, gamblers could generally deduct 100% of their losses up to the amount of their winnings, meaning that if you broke even, you typically didn’t owe taxes on your gambling activity. Beginning this year, a new provision in the OBBBA limits the deduction to 90% of gambling losses. That change could lead to an unexpected tax bill on what amounts to unrealized income.For example, if you won $10,000 and lost $10,000, you would still owe taxes on $1,000 of income. That’s because you could deduct only $9,000 of your losses, even though you didn’t actually come out ahead overall.
For example, if you won $10,000 and lost $10,000, you would still owe taxes on $1,000 of income. That’s because you could deduct only $9,000 of your losses, even though you didn’t actually come out ahead overall.What's the standard deduction for this filing season?
What's the standard deduction for this filing season? What's the standard deduction for this filing season?For 2025 tax returns (taxes filed in 2026), the standard deduction is $15,750 for single filers and those married filing separately, $31,500 for those married filing jointly and $23,625 for heads of household.
For 2025 tax returns (taxes filed in 2026), the standard deduction is $15,750 for single filers and those married filing separately, $31,500 for those married filing jointly and $23,625 for heads of household.If your gambling losses, combined with all your other deductions, don't reach at least this number, you might not want to write off those bad bets.
If your gambling losses, combined with all your other deductions, don't reach at least this number, you might not want to write off those bad bets.» MORE: Popular tax deductions and tax breaks
» » » MORE: MORE: MORE: Popular tax deductions and tax breaksClaiming gambling losses on your taxes
Claiming gambling losses on your taxesAnother factor to consider when writing off gambling losses is that while a casino or sportsbook might send you a record of your gains, they're unlikely to break down what you lost. You'll need to keep your own records for these purposes, the IRS says.
Another factor to consider when writing off gambling losses is that while a casino or sportsbook might send you a record of your gains, they're unlikely to break down what you lost. You'll need to keep your own records for these purposes, the IRS says."To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses," the agency says on its website
"To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses," the agency says on its website Internal Revenue Service. Topic no. 419, Gambling income and losses. Accessed Jan 29, 2024. .It's a good idea to be vigilant with recordkeeping anyway. If you have documentation, you can ensure your information matches whatever records you might receive from a casino.
It's a good idea to be vigilant with recordkeeping anyway. If you have documentation, you can ensure your information matches whatever records you might receive from a casino. AD Owe $10,000+ or More? This Tax Season Could Be Your Chance to Qualify Each year the IRS writes off millions in tax debt, yet few have applied. Learn moreon Anthem Tax Services' website
AD Let’s resolve your tax issues: Tax Relief & Resolution Services for IRS Tax Debt Certified Enrolled Agents, CPAs, and Tax Attorneys on your case. Learn moreon TaxRise's website
How do state taxes treat gambling?
How do state taxes treat gambling?Sports betting is legal in 39 states and the District of Columbia, according to the American Gaming Association
Sports betting is legal in 39 states and the District of Columbia, according to the American Gaming Association American Gaming Association. Interactive U.S. Map: Sports Betting. Accessed Jul 11, 2025. . If you have gambling winnings, it's worthwhile to understand the tax considerations in the state where you live and where you gambled.While you're most likely to have to settle up with your home state, tax rates and reporting requirements vary widely across the U.S. There may be local taxes that businesses are required to withhold as well.
While you're most likely to have to settle up with your home state, tax rates and reporting requirements vary widely across the U.S. There may be local taxes that businesses are required to withhold as well.Even FanDuel, one of the country's leading online sports betting platforms, doesn't hazard a guess about how states or municipalities will handle gambling proceeds.
Even FanDuel, one of the country's leading online sports betting platforms, doesn't hazard a guess about how states or municipalities will handle gambling proceeds."It depends on the state," FanDuel says on its website, adding that it might have to submit tax information "to one or more state taxing authorities.
"It depends on the state," FanDuel says on its website, adding that it might have to submit tax information "to one or more state taxing authorities. FanDuel. Taxes with FanDuel Racing. Accessed Mar 22, 2024. "» Learn more: State taxes and how they work
» » » Learn more: Learn more: State taxes and how they workHelpful resources
Helpful resources Schedule C: What It Is, Who Has to File It How Federal Tax Brackets and Rates Work Federal Income Tax Calculator and Refund Estimator 2025-2026 What Is a 1099 Form? How It Works, Who Gets One, Types More like this Taxes Freelancer Taxes: A Guide for Filing With a Side Hustle You'll get more tax paperwork, and you'll likely need to file more forms at tax time. Here's how to stay on top of it all. Tina Orem Self-Employment Tax: 2026 Rates and Calculator Self-employment tax is a mix of Social Security and Medicare taxes. Use our calculator to estimate what you owe. Tina Orem Schedule C: What It Is, Who Has to File It Schedule C is an IRS tax form that reports profit or loss from a business. Sole proprietors or single-member LLCs typically use the form. Tina Orem Get started Get startedon Anthem Tax Services's website
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