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Do You Have to Pay Taxes on Gambling Winnings?
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Do You Have to Pay Taxes on Gambling Winnings?

Do You Have to Pay Taxes on Gambling Winnings?

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Whether you hit the jackpot at a casino, won your fantasy football league, or cashed in on a sports bet, the IRS wants to know. All gambling winnings are taxable income, and understanding the reporting rules helps you avoid penalties and surprises at tax time.

Quick Answer

Yes, all gambling winnings are taxable income, regardless of amount. You must report winnings from casinos, lotteries, sports betting, poker, bingo, fantasy sports, and horse racing on your federal tax return. 

For tax year 2025, you'll receive Form W-2G if you win $1,200+ from slots/bingo, $1,500+ from keno, $5,000+ from poker tournaments, or $600+ from sports betting/lotteries (if 300 times your wager). Starting in 2026, most thresholds change to a unified $2,000. 

You can deduct gambling losses up to the amount of your winnings if you itemize (IRS Publication 525, Taxable and Nontaxable Income, 2024).

 

 

What Gambling Winnings Are Taxable?

All gambling winnings are taxable income, including:

  • Casino games (slots, blackjack, roulette, craps)

  • Poker (cash games and tournaments)

  • Sports betting (in-person and online)

  • Horse racing and dog racing

  • Lotteries and raffles

  • Bingo and keno

  • Fantasy sports leagues

  • Game show winnings

  • Sweepstakes prizes

Non-cash prizes count too. If you win a car or vacation, you owe taxes on the fair market value (IRS Publication 525, 2024).

 

 

When Do You Get Form W-2G?

Form W-2G reports gambling winnings to you and the IRS. You receive this form when your winnings exceed certain thresholds.

For Tax Year 2025 (Filing in 2026)

Bingo or slot machines: $1,200 or more

Keno: $1,500 or more

Poker tournaments: $5,000 or more (net of buy-in)

Sports betting, lotteries, or pools: $600 or more AND at least 300 times your wager

Horse racing: $600 or more AND at least 300 times your wager

Table games like blackjack, craps, and roulette generally don't trigger Form W-2G, but you still must report all winnings (IRS Instructions for Forms W-2G and 5754, 2025).

For Tax Year 2026 and Later (Filing in 2027+)

Major changes starting 2026:

Sports betting, slots, and certain other gambling: $2,000 or more (new unified threshold)

Keno: $2,000 or more (increased from $1,500)

Poker tournaments: $5,000 or more (unchanged)

Lotteries, wagering pools, and sweepstakes: $2,000 or more AND at least 300 times your wager

Starting in 2027, these thresholds will adjust for inflation (IRS Instructions for Forms W-2G and 5754, 2026).

 

 

How Much Tax Will You Owe?

Gambling winnings are taxed as ordinary income at your regular tax rate.

Federal Withholding

24% federal withholding if you win:

  • $5,000 or more from a poker tournament, sweepstakes, or lottery (minus your wager)

  • Any amount where the winnings minus wager exceed $5,000

Backup withholding (24%) applies if:

  • You don't provide a valid Social Security number

  • You owe back taxes to the IRS

If withholding applies, it's taken out before you receive your winnings (IRS Publication 505, Tax Withholding and Estimated Tax, 2024).

State Taxes

Most states also tax gambling winnings. Some have flat rates, others use your regular income tax rate. A few states (like Nevada and Florida) have no state income tax.

Check your state's tax rules, as you may owe state taxes even if you won in a different state.

 

 

How to Report Gambling Winnings

If You Received Form W-2G

Report the amount from Box 1 (Reportable Winnings) as "Other Income" on Form 1040, Schedule 1, Line 8b.

If federal tax was withheld (Box 4), include that on Form 1040, Line 25.

If You Didn't Receive Form W-2G

You still must report all winnings, even small amounts. Keep records of:

  • Date and location of gambling

  • Type of gambling activity

  • Amount won

  • Amount wagered or lost

Report total winnings on Schedule 1 (Form 1040), Line 8b (IRS Instructions for Schedule 1, 2024).

 

 

Can You Deduct Gambling Losses?

Yes, but only if you itemize deductions on Schedule A. You cannot deduct more than your winnings.

The Rules

Casual gamblers:

  • Deduct losses up to the amount of winnings

  • Must itemize (can't use standard deduction)

  • Report losses on Schedule A, Line 16

Professional gamblers:

  • Report income and expenses on Schedule C

  • Can deduct ordinary and necessary business expenses

  • Losses still limited to winnings

Example: You won $10,000 and lost $7,000. If you itemize, you can deduct $7,000 in losses. If you lost $12,000, you can only deduct $10,000 (limited to your winnings).

What You Need to Prove Losses

Keep detailed records:

  • Wagering tickets, receipts, or statements

  • Canceled checks or credit card records

  • Bank withdrawal records from ATMs at casinos

  • Win/loss statements from casinos or sportsbooks

  • Diary or log with dates, locations, amounts won and lost

A gambling log with the date, type of gambling, location, people you gambled with, and amounts won and lost strengthens your deduction (IRS Publication 529, Miscellaneous Deductions, 2024).

 

 

What to Do Now

  1. Gather all Forms W-2G. Collect forms from casinos, sportsbooks, and lottery commissions. They're typically mailed by January 31.

  2. Calculate total winnings. Add up all gambling winnings for the year, including amounts that didn't trigger Form W-2G (like table game wins under $600).

  3. Document your losses if you itemize. Gather receipts, win/loss statements, and logs. Only deduct losses if you're itemizing deductions (not taking the standard deduction).

  4. Report everything on your tax return. Use Schedule 1 for winnings and Schedule A for losses (if itemizing). Include any federal withholding from Box 4 of Form W-2G.

  5. Consider estimated tax payments. If you have big wins and little or no tax withheld, you may need to make estimated payments to avoid underpayment penalties. Use Form 1040-ES.

 

 

Common Mistakes to Avoid

  • Not reporting small wins. You must report all gambling winnings, even $50 from a poker game with friends. The IRS doesn't have a minimum threshold for reporting income.

  • Deducting losses without itemizing. Gambling losses are only deductible if you itemize on Schedule A. If you take the standard deduction, you can't deduct losses.

  • Deducting more losses than winnings. Your loss deduction is capped at your total winnings. You can't create a net loss or carry losses forward to future years.

  • Not keeping records. Without documentation, the IRS can disallow your loss deduction. Keep logs, receipts, and statements for at least three years.

  • Claiming losses from a different year. You can only deduct losses from the same tax year as your winnings. You can't use 2024 losses to offset 2025 winnings.

  • Professional gambler status assumptions. Most people are casual gamblers. Professional status requires proof that gambling is your primary livelihood pursued regularly and continuously for profit.

 

 

Forms and Resources

Form W-2G: Certain Gambling Winnings. Issued by payers when winnings exceed thresholds. You receive one copy, IRS receives another. Available at IRS.gov/forms.

Form 1040, Schedule 1: Additional Income and Adjustments to Income. Report gambling winnings on Line 8b. Available at IRS.gov/forms.

Form 1040, Schedule A: Itemized Deductions. Deduct gambling losses on Line 16 (up to winnings amount). Available at IRS.gov/forms.

Form 1040-ES: Estimated Tax for Individuals. Use this to make quarterly estimated tax payments if you have large winnings with little withholding. Available at IRS.gov/forms.

IRS Publication 525: Taxable and Nontaxable Income. Chapter on gambling winnings explains reporting requirements. Available at IRS.gov/publications.

IRS Publication 529: Miscellaneous Deductions. Explains gambling loss deduction rules and recordkeeping requirements. Available at IRS.gov/publications.

IRS Publication 505: Tax Withholding and Estimated Tax. Explains withholding on gambling winnings and when to make estimated payments. Available at IRS.gov/publications.

 

 

Bottom Line

All gambling winnings are taxable income that must be reported on your federal tax return, regardless of amount. 

For 2025, you'll receive Form W-2G for larger wins (starting at $600 to $5,000 depending on the game). 

Starting in 2026, most thresholds change to $2,000. You can deduct losses up to your winnings if you itemize and keep good records. Report winnings on Schedule 1 and losses on Schedule A.

 

 

Sources

IRS Publication 525 (2024), Taxable and Nontaxable Income – Internal Revenue Service – Tax year 2024 – https://www.irs.gov/publications/p525 

IRS Instructions for Forms W-2G and 5754 (2025) – Internal Revenue Service – Tax year 2025 – https://www.irs.gov/instructions/iw2g 

IRS Instructions for Forms W-2G and 5754 (2026) – Internal Revenue Service – Tax year 2026 – https://www.irs.gov/instructions/iw2g 

IRS Instructions for Schedule 1 (Form 1040) (2024) – Internal Revenue Service – Tax year 2024 – https://www.irs.gov/instructions/i1040s1 

IRS Publication 529 (2024), Miscellaneous Deductions – Internal Revenue Service – Tax year 2024 – https://www.irs.gov/publications/p529 

IRS Publication 505 (2024), Tax Withholding and Estimated Tax – Internal Revenue Service – Tax year 2024 – https://www.irs.gov/publications/p505 

IRS Topic No. 419, Gambling Income and Losses – Internal Revenue Service – Current as of 2025 – https://www.irs.gov/taxtopics/tc419 

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