Taxes on Gambling Winnings: What You Owe and How to Report It

The sportsbook app paid out, or the slot machine locked up and an attendant walked over with a form — and now you're wondering what the IRS expects. You don’t want to get an underreporting notice, because the payer already sent your numbers to the IRS.

Every dollar you win is taxable income, whether or not you got a Form W-2G, and it goes on Schedule 1, line 8b of your Form 1040. Your losses may be partly deductible, but only if you itemize. Ten minutes from now you'll know your number and how to enter it.

What Counts as Gambling Winnings?

If you're lucky enough to win it big, you’ll likely have to deal with taxes at the venue before your winnings are paid out. Even if you win a smaller amount and retain the full amount of your winnings, you still must report them on your tax return. The IRS requires taxpayers to complete Form W-2G when their winnings reach or exceed certain thresholds. For example, you're required to fill out this form if:

• Your horse track winnings are $600 or 300 times the bet.
• You win $1,200 or more at bingo or slot machine games.
• You win $1,500 or more from keno games.
• You win $5,000 or more in a poker tournament.

Type	2026	Less Wager?	300x?
Bingo	$2,000	No	No
Slot machines	$2,000	No	No
Keno	$2,000	Yes	No
Poker tournaments	$2,000	Yes	No
Lotteries, sweepstakes, pools	$2,000	Yes	Yes
Horse and dog racing	$2,000	Yes	Yes
Sports betting; other wagers	$2,000	Yes	Yes

When you complete the tax form, often the venue will withhold of 24% on site for taxes. Keep in mind that the IRS doesn't require taxpayers to complete a W-2G for certain table games such as craps, blackjack, roulette, baccarat, etc. However, you will still need to report the winnings and pay taxes on them, so it's important to keep good records.

If you have gambling losses, you may be able to claim them to help offset winnings. In addition to federal taxes, you may have to pay state taxes, but this depends on your state of residence. If you gamble regularly, it may be a good idea to familiarize yourself with your state's laws to stay in compliance. You can find more information on individual states here.

Why the Standard Deduction Usually Wins

The practical answer you need before you spend time digging through a year’s worth of betting history is that gambling losses are deductible only if you itemize deductions.

For a typical filer with W-2 income and some sportsbook activity, itemizing may not make financial sense if their total itemized deductions don’t exceed the standard deduction. Here’s a quick 30-second test that helps you compare the two and figure out whether tracking down every gambling loss is likely to affect your tax bill.

1. Add up your itemized deductions without gambling losses. Think mortgage interest, state and local taxes, qualifying charitable donations, and other deductions you’re eligible to itemize.
2. Add your deductible gambling losses. Remember, gambling losses have their own limits, so the amount you can claim may be less than what you actually lost.
3. Compare that total with your standard deduction. If your itemized deductions still don’t beat your standard deduction, your gambling losses may not reduce your federal tax bill.

For example, if your standard deduction is $16,000 and you have $5,000 in other itemized deductions plus $3,000 in deductible gambling losses, your itemized total is only $8,000. Taking the $16,000 standard deduction would still give you the larger deduction.

This doesn’t mean you can ignore your gambling winnings. You still have to report taxable winnings whether or not you can deduct your losses. This quick check just tells you whether gathering all those loss records is likely to change the deduction you claim.

This doesn’t change the requirement to report gambling winnings. It simply helps you know whether documenting your losses could actually result in a deduction before they spend an evening combing through bet histories.

How to Report Gambling Winnings on Form 1040

To report gambling winnings and losses on your federal tax return, follow these five steps:

1. Report your gambling winnings on Schedule 1, Part I, line 8b (“Gambling”)
2. Carry the total from Schedule 1 to line 10
3. Transfer the Schedule 1 total to Form 1040, line 8
4. If federal income tax was withheld from your winnings, take the amount shown in box 4 of Form W-2G and report it on Form 1040, line 25c.
5. If you qualify to deduct gambling losses, report those separately on Schedule A, line 16.

One important detail trips up a lot of filers: winnings and losses never net against each other on your return. If you won $6,000 and lost $6,000, you don't report zero. You report $6,000 of gambling income and claim your losses separately as a deduction if you qualify for one.

Can You Deduct Gambling Losses? The New 90% Limit on Gambling Losses

The gambling loss deduction limit, which applies to tax years beginning after December 31, 2025, has been updated.

Under the OBBBA amendment to IRC §165(d), gamblers can deduct only 90% of their losses, even when those losses equal or exceed their winnings. For example, if you win $10,000 and lose $10,000, you can deduct no more than $9,000. That leaves you with $1,000 of taxable income on money you never actually kept.

Lawmakers have introduced bills to repeal the new limit, and one advanced out of a House committee in September 2026, but as of now, nothing has been signed into law.

Sports Betting and Online Casino Winnings

Nothing about betting from your phone changes the tax rules. A sportsbook app, an online casino and a table on a casino floor all produce the same kind of income, and all of it is reportable.

What changes is how the paperwork reaches you. The $2,000 threshold applies to a single qualifying wager, not to your year. Grind out $9,000 of profit across 400 small bets and you may never see a Form W-2G. The income is still yours to report.

Most apps post a year-end summary in your account, usually under a tax or documents tab. Those summaries are a convenience, not a tax form. They aren't standardized across operators, some report total amount wagered rather than profit, and the IRS doesn't receive a copy. Use one as a starting point, then check it against your own records.

Daily fantasy sports work differently again. Operators generally issue a Form 1099-MISC once you clear $600 for the year, and that figure usually reflects your entry fees netted against your winnings. If you're not sure whether your contests count as wagering at all, see whether fantasy sports counts as gambling.

Promotional credits, bonus bets and referral rewards are income too, valued at what you actually realize from them.

What Records to Keep

If you plan to claim losses, the burden of proof is entirely yours. The IRS expects a log kept as you go, not one reconstructed in April — and it expects that log to be specific.

Your record should capture five things for every session:

1. Date and the type of wager
2. Name and address or location of the establishment or platform
3. Names of anyone who was with you
4. Amount you won
5. Amount you lost

Back the log with whatever the venue or app gives you: W-2G forms, wagering tickets, canceled checks, credit records, bank and card statements and payment app history. The IRS asks for different support depending on the game, including the machine number and time of play for slots, the table number and pit credit data for table games, and ticket purchases and dates for lotteries.

Do States Tax Gambling Winnings?

Usually yes, and your state may treat your losses less generously than the IRS does.

Nine states have no individual income tax at all, so gambling winnings carry no state bill there: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Everywhere else, check two things before you file:

First, whether your state lets you deduct losses at all. A number of states tax the full amount you won and allow no deduction for what you lost — among them Connecticut, Illinois, Indiana, Kansas, Louisiana, North Carolina, Ohio, Rhode Island and Vermont. Massachusetts allows the deduction only for losses at state-licensed operators. In a state like these, a break-even year on a sportsbook app can still produce a real tax bill.

Second, where you were when you won. Winnings are generally sourced to the state where you placed the wager, so a weekend across the state line can mean a nonresident return there and a credit on your home state return.

Frequently Asked Questions

Do I owe tax if I never got a Form W-2G?

Yes. The threshold decides whether the payer files a form, not whether the money is taxable. Every dollar you win belongs on Schedule 1, line 8b, whether or not you use a form.

Can I just subtract my losses from my winnings?

No. You report the full amount you won as income, then claim losses separately on Schedule A, and only if you itemize. For 2026, that deduction is capped at 90% of what you lost.

Do sportsbook apps report my winnings to the IRS?

They file a Form W-2G when a single qualifying wager hits the $2,000 threshold. Smaller wins usually generate no form, but they're still reportable — and the year-end summary in your account isn't a tax document.

How much tax will I pay on gambling winnings?

There's no special gambling rate. Winnings are ordinary income taxed at your marginal rate. The 24% you may see withheld at the window is a deposit, not the final bill — you settle up when you file.