You can deduct gambling losses, but only if you itemize and only up to the amount of your gambling winnings

The IRS allows you to deduct gambling losses on your federal tax return, but with a critical limit: you can only deduct losses up to the total amount of gambling income you reported that year. If you won $500 and lost $800, you can deduct only $500 in losses. You cannot use gambling losses to create a net loss that reduces your other income.

To claim losses, you must itemize deductions on Schedule A (Form 1040) rather than take the standard deduction. For most people, the standard deduction is larger, so claiming gambling losses only makes sense if your total itemized deductions—including mortgage interest, state taxes, charitable donations, and medical expenses—exceed the standard deduction for your filing status.

You also must have documentation for every loss you claim. The IRS does not accept estimates or memory. You need records that show what you gambled, when, where, and how much you lost.

Key Takeaways

  • Gambling losses can only be deducted up to the amount of gambling winnings you reported that same year.
  • You must itemize deductions on Schedule A to claim losses; the standard deduction is usually larger and eliminates the benefit.
  • Documentation must include the date, location, type of gambling, and amount lost for each session or bet.
  • Gambling income (winnings) must be reported on your tax return regardless of whether you claim losses.
  • Losses from illegal gambling and losses you cannot document are not deductible.

What counts as gambling income and loss for tax purposes

The IRS treats all gambling winnings as taxable income. This includes casino winnings, lottery tickets, horse racing, sports betting, online poker, raffles, and slot machines. If you won $50 on a scratch ticket, that $50 is income. If you won $5,000 at a blackjack table, that $5,000 is income. You report this on Form 1040, line 5, labeled "Other income."

Gambling losses are the money you spent on gambling activities where you did not win. If you spent $200 on lottery tickets and won nothing, that $200 is a loss. If you lost $300 at a poker table, that $300 is a loss. The loss must come from the same type of gambling or the same location—you cannot mix a $100 loss from a casino with a $50 loss from a lottery and claim $150 as a single loss without documenting each one separately.

You cannot deduct losses from illegal gambling. If you gambled in a jurisdiction where the activity was illegal, or if you gambled with an unlicensed operator, those losses are not deductible.

Documentation you need to keep for each gambling loss

The IRS requires contemporaneous written evidence of your losses. "Contemporaneous" means the record was made at or near the time of the gambling, not weeks or months later from memory. A diary entry written the same day is acceptable; a list you create in January for gambling you did in December is not.

For each gambling session or bet, you should document:

  • The date of the gambling activity
  • The location (casino name, racetrack, online platform, lottery retailer)
  • The type of gambling (slots, blackjack, poker, horse racing, lottery, sports betting)
  • The amount you wagered or spent
  • The amount you won (if any)
  • The net loss for that session

Keep receipts, tickets, and statements from the gambling location. If you gambled at a casino, ask for a player card statement showing your play history. If you gambled online, read or print your account history and transaction records. If you bought lottery tickets, keep the tickets themselves or a receipt showing the purchase. If you bet on horses or sports, keep your betting slips and any payout records.

A straightforward notebook or spreadsheet works if you write in it the same day. Many people use a small ledger with columns for date, location, type, amount wagered, amount won, and net loss. The IRS does not require a specific format—it requires proof that you recorded the information contemporaneously and that the records are accurate.

How to report gambling losses on Schedule A

Gambling losses go on Schedule A (Form 1040), which is the form for itemized deductions. You will find gambling losses on line 28, labeled "Other—from list."

Before you fill in Schedule A, you must first report your gambling winnings on Form 1040 itself. Gambling income goes on line 5 ("Other income"). If you received a W-2G form from a casino or lottery, the winnings are already reported to the IRS, and you must include that amount on your return.

On Schedule A, line 28, enter your total gambling losses for the year, but only up to the amount of gambling income you reported on Form 1040. If your winnings were $600 and your losses were $1,200, you enter $600 on line 28. If your winnings were $1,200 and your losses were $600, you enter $600 on line 28 (you cannot claim a loss larger than your winnings).

Attach your documentation to your tax return or keep it in your records at home. The IRS does not require you to mail in receipts and diary entries, but you must have them available if the IRS requests them during an audit. If you cannot produce documentation for a loss you claimed, the IRS will disallow it and you may owe back taxes plus penalties.

When itemizing deductions makes sense for gambling losses

Itemizing is only worth it if your total itemized deductions exceed the standard deduction. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married filing jointly. These amounts change each year.

If you are single, earned $50,000, had $600 in gambling losses to deduct, and had no other deductions, your total itemized deductions would be $600. The standard deduction of $14,600 is much larger, so you would take the standard deduction instead and get no benefit from the gambling losses.

However, if you are married, own a home with a $12,000 mortgage interest deduction, paid $5,000 in state income tax, donated $3,000 to charity, and had $600 in gambling losses, your total itemized deductions would be $20,600. This exceeds the standard deduction of $29,200 for married filing jointly, so you would still take the standard deduction—but if your other deductions were higher, itemizing could make sense.

Use the IRS interactive tax assistant or a tax software program to compare your itemized deductions against the standard deduction before you decide to claim gambling losses. If itemizing does not benefit you overall, there is no point in claiming the losses.

Reporting gambling winnings from W-2G forms

If you won more than a certain amount at a casino, lottery, or racetrack, the operator is required to issue you a Form W-2G (Certain Gambling Winnings). The threshold varies by type of gambling. For slot machines and bingo, it is $1,200. For keno, it is $1,500. For horse racing and sports betting, it is $600. For lotteries and raffles, it is $5,000.

The gambling operator will send you a copy of the W-2G and also report it to the IRS. You must include the amount shown on the W-2G in your gambling income on Form 1040, line 5. Do not try to hide it or claim it was a loan—the IRS already knows about it.

If you won money but did not receive a W-2G (because the win was below the threshold or the operator did not issue one), you still must report it as income on your tax return. The absence of a W-2G does not mean the income is not taxable.

What happens if you cannot document your losses

If you claim gambling losses and the IRS audits you, you must produce documentation for every loss you deducted. If you cannot produce a diary, receipt, or statement showing that you lost $500 at a specific casino on a specific date, the IRS will disallow that $500 deduction.

Disallowed deductions reduce your refund or increase the tax you owe. You may also owe interest on the unpaid tax and a penalty for underpaying. The penalty for negligence is typically 20 percent of the underpaid tax.

If you gambled but did not keep records, you cannot claim the losses on your tax return. It is better to report only the gambling income you can prove and claim no losses than to estimate losses and face penalties during an audit.

Frequently Asked Questions

Do I have to report gambling winnings if I did not receive a W-2G?

Yes. You must report all gambling winnings as income on your tax return, whether or not you received a W-2G. The W-2G is issued only when winnings exceed certain thresholds, but smaller wins are still taxable. The IRS expects you to report them.

Can I deduct losses from illegal gambling or online gambling in states where it is not allowed?

No. Losses from illegal gambling are not deductible. If you gambled in a jurisdiction where the activity was illegal or with an unlicensed operator, you cannot claim those losses on your tax return, even if you have documentation.

What if my gambling losses are much larger than my winnings?

You can only deduct losses up to the amount of your winnings. If you won $500 and lost $5,000, you can deduct only $500. The remaining $4,500 in losses cannot be deducted in that year or carried forward to future years.

Do I need to keep physical receipts or can I use screenshots and account statements?

Screenshots, account statements, and digital records are acceptable if they clearly show the date, location, type of gambling, and amount. Keep them in a format you can access and print if needed. Physical receipts are also fine. The key is that the documentation must be contemporaneous and verifiable.

If I take the standard deduction, can I still deduct gambling losses?

No. Gambling losses are deducted on Schedule A, which is only used if you itemize deductions. If you take the standard deduction, you cannot claim gambling losses. You would still report gambling winnings as income, but you would get no deduction for losses.