Do I Have to Pay Taxes on Sports Betting Winnings?
Whether you’re an occasional sports bettor dabbling during March Madness or a die-hard fan placing regular bets on NFL games, one question is critical when tax season rolls around:
Do I have to pay taxes on my sports betting winnings?
The short answer? Yes. All gambling winnings—including sports bets—are considered taxable income by the IRS and, in many cases, by your state government too.
In this comprehensive guide, we’ll break down everything you need to know about sports betting taxes in the U.S., including:
- What counts as sports betting income
- How to report your winnings (and losses)
- What forms you’ll need
- How your tax bracket affects your liability
- And the importance of proper recordkeeping
Let’s dive in.
Are Sports Betting Winnings Taxable?
Yes, sports betting winnings are fully taxable under U.S. federal tax law. The IRS treats these earnings as “other income”—just like lottery wins, poker tournament cashes, or slot machine jackpots.
💡 Key Point: Even if your total winnings are small or you don’t receive a tax form from the sportsbook, you are still required to report them.
Winnings can come from:
- Traditional sportsbooks (online or in-person)
- Fantasy sports leagues
- Peer-to-peer betting apps
- Casino sportsbooks
- Office sports pools or brackets
Whether you’re using FanDuel, DraftKings, BetMGM, or betting through a neighborhood league with your friends, the rule is the same: all winnings must be reported on your tax return.
Understanding the IRS Rules on Sports Betting Income
When it comes to reporting gambling income—including sports betting—the IRS takes a no-nonsense approach.
✅ IRS Reporting Guidelines
- All winnings are considered taxable income, regardless of whether you receive a form from the sportsbook.
- You must report your total gambling income on Schedule 1 (Form 1040), Line 8b.
- Winnings can potentially increase your marginal tax rate and affect your total tax bill.
So, if you earned $60,000 from your job and another $10,000 betting on NBA games, your total taxable income becomes $70,000—which might bump you into a higher tax bracket.
What Forms Do I Need for Sports Betting Taxes?
If you’ve won big—or even moderately big—you might receive Form W-2G from the sportsbook or casino.
🧾 When Do You Get a W-2G?
You’ll typically receive a W-2G if:
- Your winnings are $600 or more, and
- The payout is at least 300 times your original wager
Example:
- You bet $10 and win $3,000 — you’ll get a W-2G.
- You bet $50 and win $500 — probably not.
You may also receive multiple W-2Gs if you’ve had several qualifying wins during the year.
🔗 Explore more about Form W-2G and Gambling Income Reporting in our dedicated tax guide.
Even if you don’t receive a W-2G, you’re still legally required to report your winnings. The IRS cross-checks data and can audit bettors who fail to report gambling income.
What About Daily Fantasy Sports and Office Pools?
Daily Fantasy Sports (DFS), like DraftKings or FanDuel, and informal sports pools (e.g., March Madness brackets), are not exempt from tax rules.
Even though you might not get a 1099 or W-2G, you’re still responsible for reporting the income.
And no—your buddy running the bracket pool isn’t legally obligated to send you a tax form. That responsibility lies with you.
Federal Withholding on Sports Betting Winnings
If your sportsbook winnings are high enough, the provider may automatically withhold taxes on your behalf.
Two Types of Withholding:
- Regular Withholding (24%): If you provide your Social Security Number.
- Backup Withholding (24%): If you don’t provide your SSN.
Example:
- Win $10,000 on a Super Bowl bet?
- The sportsbook may withhold $2,400 before you even receive the cash.
Even if taxes are withheld, you still need to report the winnings on your tax return and reconcile the withheld amount on your final liability.
Can I Deduct My Sports Betting Losses?
Here’s the good news: you can deduct gambling losses—but only if you itemize your deductions on your tax return.
⚖️ Rules for Claiming Sports Betting Losses:
- You can only deduct losses up to the amount of your reported winnings.
- You must itemize using Schedule A (Form 1040).
- Losses are reported on Line 16 of Schedule A.
So if you win $5,000 but lost $7,000 over the year, you can deduct $5,000—not the full loss.
✅ Best Practice: Keep detailed records of all wins, losses, and bets placed throughout the year.
🔗 Need help with recordkeeping?
How to Keep Records for Sports Betting
Good recordkeeping is critical when it comes to defending your tax deductions and complying with IRS rules.
🧾 Recommended Records to Keep:
- Dates and types of wagers
- Names of sportsbooks or casinos
- Amounts won and lost
- Receipts, screenshots, or bank statements
- Copies of W-2Gs or 1099s
While many online sportsbooks allow you to download your annual betting summary, don’t rely solely on them—especially if you also bet at retail locations or with third-party pools.
🔗 For more tax prep tips, read: Tax Season Checklist
What About State Taxes on Sports Betting?
Federal tax isn’t the end of the story. State tax laws on gambling winnings vary dramatically.
Some Key Differences:
| State | Taxable? | Notes |
| California | ❌ | No tax on sports betting (currently not legalized) |
| New York | ✅ | Winnings are taxable, even from out-of-state |
| Florida | ❌ | No personal income tax, but federal taxes still apply |
| New Jersey | ✅ | Includes fantasy sports & online wins |
| Nevada | ✅ | Gambling income must be reported federally |
⚠️ Important: Even if your state doesn’t tax gambling, your federal obligations still apply.
Common Myths About Sports Betting Taxes
❌ “If I don’t get a form, I don’t need to report it.”
Wrong. IRS guidelines require you to report all gambling income, with or without a form.
❌ “Only professional gamblers need to worry about taxes.”
Also wrong. Even casual, one-time bettors must report winnings.
❌ “I can just use my net winnings for tax purposes.”
Nope. You report total winnings as income. Losses can only be deducted if you itemize, and only up to the total winnings.
What Happens If I Don’t Report My Winnings?
Failing to report your sports betting income could result in:
- IRS penalties
- Interest on unpaid taxes
- Back taxes owed
- In severe cases, fraud investigations
Even small unreported winnings can trigger IRS scrutiny, especially if your sportsbook sends a W-2G or 1099 and you fail to include it.
Should I Work with a Tax Pro?
Yes—if you regularly bet or have any large wins, it’s smart to work with a professional.
A tax expert can help:
- Ensure you’re complying with both federal and state tax laws
- Maximize deductions (like losses, fees, or write-offs)
- Avoid underpayment penalties
- Prepare you in case of an IRS audit
At Spyglass Accounting and Financial Services, we specialize in individual tax returns, including those with gambling income and unique side hustle income.
Final Tips for Sports Bettors Filing Taxes
- Report all winnings, no matter how small
- Track your losses and wins year-round
- Don’t rely solely on sportsbooks to send forms
- Know your state’s laws
- Consider itemizing if your losses are significant
- Consult a tax advisor if you’re unsure