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

The IRS allows you to deduct gambling losses on Schedule A (the itemized deductions form), but with a hard rule: your loss deduction cannot exceed your gambling winnings for the year. If you won $500 at a casino and lost $800 at poker, you can deduct only $500 in losses. You cannot use the remaining $300 loss to reduce other income.

This matters because most people do not itemize deductions. The standard deduction (a flat amount you can subtract instead of listing deductions one by one) is higher than what most households deduct by itemizing. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married filing jointly. If your total itemized deductions, including gambling losses, do not exceed your standard deduction, you get no tax benefit from reporting the losses at all.

You must report all gambling winnings as income on your tax return, regardless of whether you deduct losses. The IRS requires this even if you received no Form W-2G (the form casinos issue for large wins). Failing to report winnings is tax evasion, not a gray area.

Key Takeaways

  • Gambling losses reduce your taxable income only if you itemize deductions on Schedule A, and only up to the amount of gambling winnings you reported that year.
  • You must report all gambling winnings as income, including winnings from poker games, sports betting, lottery tickets, and online gambling.
  • Losses from one type of gambling cannot offset winnings from another type—the IRS treats all gambling as a single activity for loss purposes.
  • You need records of both wins and losses: receipts, tickets, statements from betting sites, or casino records to support your deduction if audited.
  • If your total itemized deductions do not exceed your standard deduction, you receive no tax benefit from gambling losses even if you report them.

What counts as a gambling loss for tax purposes

A gambling loss is money you wagered and lost. This includes casino table games, slot machines, horse racing, dog racing, lottery tickets, scratch-off tickets, bingo, keno, online poker, sports betting, fantasy sports contests, and raffles. The loss is the amount you paid to enter or play minus any winnings from that same activity.

You cannot deduct losses from illegal gambling, even if you reported the winnings. You also cannot deduct the cost of travel to a casino, meals, hotel rooms, or other expenses related to gambling, even if you gambled while you were there. Only the actual money lost in the wager itself counts.

If you gamble professionally—meaning you do it as a business rather than for recreation—different rules may explore, and you would report it on Schedule C (business income) rather than Schedule A. This is rare and requires proof that you gamble with the intent to make a profit and treat it as a business. The IRS looks at factors like time spent, records kept, and whether you have made a profit in most years.

How to report gambling winnings and losses on your return

Report all gambling winnings on line 8 of Schedule 1 (Additional Income and Adjustments to Income), which feeds into your Form 1040. This is where you list the total of all winnings from all sources for the year. The IRS does not care whether you won $50 or $50,000—you report it.

If you itemize deductions, report gambling losses on Schedule A, line 16 (Other miscellaneous deductions). The loss amount cannot exceed your winnings. If your winnings were $300 and your losses were $500, you enter $300 on Schedule A. The other $200 in losses disappears and provides no tax benefit.

You do not need to list each individual win or loss. You can total them up for the year. However, you must keep records that support your numbers in case the IRS asks. A spreadsheet with dates, locations, amounts won, and amounts lost is sufficient, as long as you can back it up with receipts or statements.

Records you need to keep

The IRS expects you to have documentation for gambling winnings and losses. For casino play, keep your player's club card statements, receipts from the cage, or written records you made at the time. For online gambling, read and save statements from the betting site showing deposits, withdrawals, and activity. For lottery or scratch-off tickets, keep the tickets themselves or a photo of them. For horse racing or sports betting, keep tickets, receipts, or account statements.

If you won more than $600 at a single location (or $1,200 from bingo or slot machines in some cases), the casino or venue will issue you a Form W-2G. Keep this form with your tax records. The IRS receives a copy, so your return must match it.

If you are audited and cannot produce records, the IRS will not allow your loss deduction. You will still owe tax on any winnings you reported, but you lose the offset. Keep records for at least three years after you file, though the IRS can go back further if it suspects fraud.

When itemizing makes sense for gambling losses

Itemizing is worth considering only if your total deductions exceed your standard deduction. Your deductions include mortgage interest, property taxes, state and local taxes (capped at $10,000), charitable donations, medical expenses above 7.5% of your income, and gambling losses. If you have a mortgage, donate regularly to charity, or live in a high-tax state, you may already be close to or above the standard deduction threshold.

Use a tax software worksheet or calculator to add up your expected deductions for the year. If the total is higher than the standard deduction for your filing status, itemizing will lower your taxable income. If it is lower, take the standard deduction and ignore the gambling losses—you get no benefit from reporting them anyway.

Some people alternate between itemizing and taking the standard deduction year to year, depending on whether they had large deductible expenses that year. If you had significant gambling losses in one year and large charitable donations or medical expenses, that might be the year to itemize.

State and local tax treatment of gambling losses

Most states follow the federal rule: you can deduct losses only up to winnings, and only if you itemize. However, a few states do not allow gambling loss deductions at all, even if you itemize on your federal return. Check your state's tax instructions or contact your state tax agency to confirm the rule where you live.

Some states also tax gambling winnings differently than the federal government. For example, a state might tax winnings at a flat rate or require withholding at the point of the win. This is separate from your ability to deduct losses. You may owe state tax on winnings even if you deducted losses on your federal return.

What happens if you do not report gambling winnings

If you receive a Form W-2G from a casino or betting site, the IRS receives a copy. If your tax return does not show that income, the IRS will likely catch it during processing and send you a notice. You will owe the tax plus interest and possibly penalties.

Even without a W-2G, the IRS can discover unreported gambling income through bank deposits, credit card statements, or tips from the gambling venue itself. Casinos and online betting sites keep records and can be subpoenaed. Unreported income is treated as tax evasion, which carries criminal penalties in addition to civil ones.

Frequently Asked Questions

Can I deduct losses from online gambling or sports betting?

Yes, if you report the winnings. Online gambling losses follow the same rules as casino losses: you can deduct them on Schedule A only up to the amount of winnings you reported, and only if you itemize. Keep statements from the betting site showing your account activity.

What if I won money one year and lost money the next year?

You cannot carry losses forward to offset future years' winnings. Each tax year stands alone. If you won $1,000 in 2023 and lost $1,000 in 2024, you report $1,000 in income for 2023 (with no loss deduction that year) and $0 in income for 2024 (because your losses equal your winnings). The 2023 loss does not help you.

Do I have to report small wins, like $20 from a scratch-off ticket?

Yes. The IRS requires you to report all gambling winnings, no matter how small. If you bought a $1 scratch-off and won $20, that $20 is income. However, if you also lost $50 on other scratch-offs that year, you can deduct up to $20 in losses on Schedule A (the amount of your winnings).

Can I deduct gambling losses if I take the standard deduction?

No. Gambling losses are an itemized deduction only. If you take the standard deduction, you cannot deduct gambling losses at all, even if you had significant losses. You still must report all winnings as income.

What if the casino did not give me a W-2G?

You still must report the winnings. The W-2G is a convenience—it tells you the amount the casino reported to the IRS. If you won money and did not receive a W-2G, you are responsible for reporting the win yourself. The IRS may not know about it when ready, but casinos keep records and can be audited or subpoenaed.