Sports Betting Tax: How Much You'll Pay in Each State as of July 2025

Do I have to pay tax on my sports betting winnings?

Yes, you do. Sorry.

All sports betting winnings are considered taxable income in the eyes of the IRS, regardless of how small they are. It doesn’t matter whether you placed your bets in person at sportsbooks or online through sports betting apps – if you made money, the government wants its cut. Even if the sportsbook doesn’t report your winnings directly to the IRS, you’re still legally required to include that income on your tax return.

Some bettors assume that they only have to report winnings above a certain threshold, but that’s a misunderstanding. There are specific thresholds that trigger automatic reporting and withholding requirements (we’ll get to that), but they don’t change your responsibility to report the income yourself. Whether you won $5 off of sportsbook promos or $50,000 on a futures bet, it’s technically all fair game for Uncle Sam.

Now, if your sports betting win is large enough, you may receive a Form W-2G from the sportsbook – essentially a tax document that outlines how much you won and whether any federal taxes were withheld. Here's how that works and when you can expect to see one.

Gaming companies are required to send bettors their W-2G forms for the previous year no later than Jan. 31 the following year.

While legislators have long considered raising the slot machine minimum W-2G threshold from $1,200 (where it has been since 1977) to $5,000 or higher, that number hasn't yet been changed. And there has been no meaningful discussion to raise the sports betting reporting threshold from its current $600 minimum W-2G limit. 

Deducting sports betting losses

Fortunately, you can deduct your sports betting losses – but only if you also report your winnings. The IRS isn’t about to let you cherry-pick just the losing days. Losses can only be deducted up to the amount of your reported gambling income, and you’ll need to itemize your deductions to do it. That means giving up the standard deduction, which for many taxpayers just isn’t worth the trade.

Let’s say you won $8,000 over the course of the year but lost $6,000 chasing those wins. You’d report the full $8,000 as income, but you could only deduct up to $6,000 in losses if you itemize (and that 100 percent deduction of losses might be changing ... soon.) You’re not getting a refund on that money – you’re just reducing your taxable winnings. And if your losses were more than your winnings, you’re out of luck. The IRS won’t let you use gambling losses to generate a net write-off.

Of course, all of this depends on your ability to keep clean records. You’ll need receipts, betting slips, bank statements or account history showing how much you wagered and lost. Without documentation, those losses don’t exist in the eyes of the IRS – which makes claiming them a risky bet of its own.

How to claim your sports betting losses

If you’re hoping to write off your sports betting losses, there’s one big catch right off the top – you have to itemize your deductions. If you’re taking the standard deduction like most people, you’re out of luck. And even if you do itemize, you can only claim losses up to the amount of your reported winnings. The IRS won’t let you use your bad bets to shrink your tax bill beyond what you won.

The actual process is pretty straightforward:

• Report your gambling income as “Other Income.”
• List your losses on Schedule A under “Other Itemized Deductions.”
• Again, you’re not deducting everything you lost. You’re only canceling out your reported winnings, dollar for dollar.
• So, if you hit a few big parlays for $12,000 but gave back $9,000 chasing more, you can report the full $12K and deduct the $9K – leaving $3,000 of taxable winnings on your return.
• Make sure to hold onto your bet history, bank records, or anything else that shows how much you actually lost.

The "Big Beautiful Bill" and sports betting tax changes

The One Big Beautiful Bill Act has wide-ranging ramifications for the American public – but we're going to focus on what it means for gamblers, and professional bettors in particular.

The Act doesn’t rewrite the playbook on how gambling income is taxed, but it does make one big change that’ll hit professional gamblers hard: there’s now a cap on how much you can write off in gambling losses when doing your federal taxes.  

Prior to the OBBBA, professional gamblers were permitted to deduct 100 percent of their gambling losses relative to their overall winnings. But a provision in the Act reduces that number to just 90 percent – creating, as one tax law expert puts it, "a tax exposure on phantom income, particularly in high-volume, low-margin professional betting strategies.

"Under this change, even a gambler who breaks even or earns a modest return in real economic terms may nonetheless face a significant federal income tax liability due to the statutory disallowance of 10 percent of otherwise deductible losses," Chad Cummings, CEO of Cummings & Cummings Law, told Covers.

"The provision does not distinguish between casual and professional gamblers in its application. However, its practical burden falls disproportionately on professionals, whose livelihoods depend on disciplined risk management and who often generate large volumes of both gross winnings and offsetting losses in the course of legitimate business activity."

While Cummings explains that the OBBBA doesn't alter how gamblers are required to report their winnings and losses, it could have a significant impact on other protocols relating to the sports bettor tax filing process.

Expert Analysis

"The introduction of this cap may have secondary effects on estimated tax calculations, quarterly payment schedules, and withholding requirements for certain gambling formats. Professional gamblers should review their accounting methods, reassess their estimated tax safe harbors, and consider whether entity-level structuring, such as through an S corporation, might provide ancillary benefits in response to the new limitation – though such options will not circumvent the statutory cap itself."

- Chad Cummings, CEO, Cummings and Cummings Law

Latest OBBBA Update

The tax change included in President Trump’s “One Big Beautiful Bill Act” won’t take effect until 2026, but already lawmakers in D.C. are trying to undo that tweak.

So far, though, the going is slow. Sen. Catherine Cortez Masto’s FULL HOUSE Act and Rep. Dina Titus’ FAIR BET Act have been referred to Congressional committees and await further action from federal lawmakers. Cortez Masto even attempted to put a rush order on her legislation, only for the effort to run into a roadblock regarding a separate tax issue.

That leaves the status quo intact for the time being, which means gamblers will be limited to deducting wagering losses equal to only 90% of their winnings, rather than the previous 100% threshold. This leaves open the possibility of sports bettors paying tax on net winnings that don’t really exist.

Sports betting income and state interception

If all of this seems like a lot to remember, we have bad news – there's more. Specifically, bettors need to know what happens in the event that they profit from a session while at the same time owing money to the state.

Cummings explains how it works.

"The process operates much like a garnishment," he said. "When a bettor registers and subsequently requests a withdrawal or receives a reportable payout, the gaming platform conducts a name match against the state’s debt registry. If a match is found, the payout is flagged and either partially or fully withheld."

That payout goes directly to the state agency – and there's no recourse for players, with operators legally required to comply.

Just as notably, you don't have to be gambling in your home state to be subject to a payout interception.

"What often surprises bettors is that this can occur regardless of whether they reside in the intercepting state," he clarified. "In many cases, simply placing a wager while physically located within the state – or being subject to that state’s tax jurisdiction by virtue of situs – may trigger set-off eligibility. Moreover, bettors are frequently unaware of existing liabilities until they attempt to cash out winnings and find that the funds have been withheld."

Cummings recommends that players focus on understanding the laws and protocols surrounding payout interception – don't blame the sportsbook, for starters – and believes that even more states will adopt the practice in future.

"As legalized sports betting expands across jurisdictions, we expect more states to adopt or strengthen these mechanisms," he told Covers. "The administrative infrastructure is already in place in most state revenue systems, and the political appetite for using gaming revenue to enforce compliance with tax and child support obligations remains high."

Cummings also notes that intercepted proceeds do not contribute to what a player might owe in taxes on gambling winnings, as they're not considered "voluntary" payments. 

Sports betting tax rate by state

U.S. gambling winnings are taxed federally at a fixed rate of 24%. However, what you're expected to pay in state taxes varies by jurisdiction. 

Here's a look at how sports betting winnings are taxed in states where legal sports wagering exists:

Check back here for any changes in state tax rates (though they don't happen often). And be sure to explore our list of states moving toward legal sports betting to track recent progress and monitor where local sports betting tax rates may arrive next.

Sportsbook tax guides

FanDuel

Includes an instructional video and separate sections for sports betting, casino, DFS, horse racing, and FanDuel Faceoff.

FanDuel tax guide

DraftKings

Includes information on forms, key dates, and a detailed FAQ section.

DraftKings tax guide

BetMGM

This catch-all article focuses primarily on casino, but sports betting tax guidance is also provided.

BetMGM tax guide

Caesars

No longer operates on desktop, so users will need to navigate the app's Settings menu for tax info; Caesars does, however, have an online FAQ for its racebook.

Caesars Racebook FAQ

Breaking sports betting news

Covers and credibility

We have been the go-to source for all things sports betting for over 30 years, covering sports betting odds, lines, picks and news. The sports betting tax information found here has been personally reviewed, verified, and fact-checked to ensure its validity.

News outlets turn to Covers for our earned reputation as a trusted and authoritative source of sports betting information. These are among the notable publications and media outlets that have referenced Covers.com and our industry experts.