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casual bet.Sports betting is big business — with lots of tax implications. And while it seems like an easy way to make some extra cash, the Internal Revenue Service sees any winnings as taxable.Here’s everything you need to know about sports betting taxes.You’re not imagining that sports gambling has exploded in the past few years. Until a 2018 United States Supreme Court ruling, betting on sports was mostly behind the scenes or in a few authorized places, like Las Vegas casinos.That ruling struck down a federal law prohibiting betting on many sports at the state level, which led to the surge of gaming. According to the American Gaming Association, sports betting is legal in 40 states, with a total economic impact of $328.6 billion and total gross gaming revenue of $125 billion in 2025.The IRS considers gambling winnings taxable, so they must be reported.“All lottery/gambling/raffle winnings are taxable, regardless of the size of the prize. Even a church raffle or office pool for March Madness,” said Joseph Rosenberg, senior fellow at Urban-Brookings Tax Policy Center.Gambling income includes cash winnings and the fair market value of prizes and is not limited to sports betting. It also includes winnings from lotteries, raffles, horse races, casinos, and more.Up NextTax-loss harvesting: What it is and how it worksHow long do I need to keep tax documents?Taxes on stocks: Here are the rules and ratesDepending on the form and size of the prize, the payer must issue you a Form W-2G, Certain Gambling Winnings. It’s used to report gambling winnings, along with any federal income tax withheld, and is mostly for one-time winnings that meet certain thresholds. The requirements for issuing one depend on the type of gambling, the amount of the winnings, and the ratio of the winnings to the wager.You might also receive a Form 1099 MISC for bets using an online betting site or app if your annual winnings are at or above $600, or based on how the payout compares to the wager.When you file your tax return, you need to report the winnings on your Form 1040 or Form 1040-SR using a Schedule 1, which is how and where you report any additional income and adjustments to that income. There is a specific line for gambling.Starting next year (for tax year 2026), the thresholds for payers to report winnings will change. The minimum will be $2,000 and will be increased annually in line with inflation.But that’s for 2026 earnings, for 2025 winnings reported on this year’s tax return, the threshold is still $600.Keep in mind, these rules are for casual betters, not professional gamblers who make a majority of their income from gambling as their business. They need to file a Schedule C as a self-employed business.If you’re unsure how to claim your gambling winnings and losses, the IRS has an online tool to help.As a winner, you’re responsible for paying taxes on any sports betting winnings, regardless of whether you receive a Form W-2G or Form 1099-MISC, but if your winnings exceed a certain amount, the payer must withhold taxes.If you win more than $5,000 wagering on sports, the payer must withhold 24% of the proceeds (winnings minus the wager) for federal income tax. That assumes the winnings are at least 300 times the amount of the wager. This is the same withholding for other forms of gambling.If you make more than one bet on the same event (called identical wagers), the proceeds are added together for reporting and withholding.Before you spend all of your winnings, that 24% is the default rate. You might have to pay even more taxes if you’re in a higher tax bracket.Learn more: Tax brackets and rates for 2025-2026And don’t forget about state tax. If the state where you live has an income tax, you might have to pay additional taxes. Some states even differentiate between online and in-person betting.While most states with legal sports betting get much of their money from taxing the gross gaming revenue from the licensed operators, the bettor isn’t off the hook completely.“Individual bettors are responsible for reporting and paying income tax on their winnings. At the state level, winnings are usually taxed as ordinary income if the state has an income tax,” said Lucy Dadayan, principal research associate with the Urban-Brookings Tax Policy Center. “Some states allow gambling losses to be deducted if you itemize; others don’t.”Let’s take a quick look at how two of the biggest online betting apps handle tax requirements.Reports winnings that meet certain thresholds to the IRSWithholds 24% if net winnings are greater than or equal to $5,000 and odds are greater than or equal to 300:1Reports if net winnings are greater than or equal to $600 and odds are greater than or equal to 330:1Aggregates multiple payouts from the same day into one Form W-2GSays the reporting threshold might be different based on the productIssues a 1099-MISC for net earnings greater than $600 in a calendar yearCustomers must verify their Social Security number once they reach $500 in annual gross winningsReports winnings to the IRS if they meet a certain thresholdIssues a Form W-2G if the net winnings are $600 or more and are at least 300 times the amount of the wagerWithholds 24% if net winnings are greater than $5,000 and at least 300 times the wagerWithholds taxes for certain states, depending on local lawsIssues a Form 1099 for certain Daily Fantasy Sports/Picks activities if the annual aggregate profit is $600 or moreAfter certain wins, the apps might ask you to fill out IRS Form W-9, so don’t be surprised if your gaming app wants your full name, Social Security or tax identification number, home address, and more.As anyone who bets knows, sometimes you win, and sometimes you lose. You might be able to lower your taxes by deducting gambling losses, but there is a catch.To deduct losses, you must itemize your taxes, which means you can’t take the standard deduction, and you can’t deduct more losses than the amount of gambling income you reported.Learn more: Standard deduction vs. itemizing: Which tax-filing approach is right for you? If you itemize your taxes, you can claim sports betting and other gambling losses under “Other Itemized Deductions” on your Schedule A, line 16.You can only claim losses up to the amount of your winnings as reported on Schedule 1 of the Form 1040 on line 8b. If you’re a nonresident alien, you generally can’t deduct gambling losses, but an online tool from the IRS can help determine if you’re eligible.The key to claiming any sports betting losses is to keep good records. To claim any losses, you must have accurate records of your gambling winnings and losses.That includes:Your records should show winnings and losses separately.The earnings diary should show:The date and type of your specific bet or betting activityThe name and address or location where you made the wagerThe names of anyone else with you when you made the betThe amount you won or lostSo make sure to keep any wagering tickets, canceled checks, credit records, bank withdrawal slips, statements, payment slips, and anything else that might provide proof of wagers.Gambling losses can include the actual wagers plus expenses you incurred in connection with the gaming activity, like travel to and from a casino.Starting in 2026, changes to the tax code (due to the One Big Beautiful Bill) will mostly impact professional gamblers.“The OBBBA limited the itemized deduction for gambling losses to 90% of reported taxable winnings. Previously, gambling losses were allowed to fully offset winnings,” Rosenberg, from the Tax Policy Center, said.While IRS rules might be a bit difficult to understand, one thing is clear about the agency’s stand on gambling winnings: They “are fully taxable and you must report the income on your tax return.”That means winnings from sports betting, raffles, lotteries, and other non-casino visits are taxable. Winnings can include non-cash prizes such as vehicles, trips, and more. Forgetting or omitting winnings, technically even small ones, could be a mistake.“Even if the payee does not issue a W-2G or withhold taxes, the income is taxable, and it is the responsibility of the individual to report and pay any resulting taxes,” Rosenberg said.Not being able to document your wins and losses adequately might be a mistake if you intend to claim those losses on your federal taxes. You will need detailed records as part of your calculations related to itemizing your taxes.“I think it is fair to say that accurate recordkeeping, both for taxable winnings and allowable deductions for losses, is likely the biggest tax mistake folks make when it comes to gambling,” Rosenberg said. “On top of potentially losing money.”Read more: How long do I need to keep tax documents? Make sure you know your state’s tax laws regarding the taxation of sports betting winnings and keep up with changes to federal policy. Just because something was allowed or not allowed one year does not mean it is the same for subsequent years.Yes. According to the IRS, gambling winnings are fully taxable and must be reported on your tax return.Maybe. Apps and websites like DraftKings, FanDuel, and others issue W-2G and 1099-MISC forms to winners if the winnings meet certain thresholds. They also report those same numbers to the IRS. Even if you don’t receive a form, the online sports betting companies say the winner is responsible for reporting all winnings.Even if a sportsbook, app, casino, or another entity withholds taxes, the standard rate is 24%. If you are in a higher tax bracket, you might owe more in income taxes.You can deduct sports betting losses only if you itemize your taxes and the losses do not exceed the value of your income from gambling. You must also have detailed records of all transactions to deduct losses.Every state has different rules regarding taxes on sports betting. It’s best to consult a tax expert in your state before filing your return.