Yes, you owe federal income tax on sports betting winnings, and most states tax them too
The Internal Revenue Service treats sports betting winnings as taxable income. This applies whether you bet through a legal sportsbook, at a casino, with a bookie, or anywhere else. The amount you owe depends on how much you won, your total income, and your state's tax rules.
If you bet through a licensed sportsbook in your state, the operator reports your winnings to the IRS on Form 1099-NEC or Form 1099-MISC. You receive a copy and must report it on your tax return. If you won through an unlicensed source, you are still legally required to report it — the IRS does not care where the money came from.
The tax rate on winnings is not a flat percentage. Your winnings are added to your other income and taxed at your ordinary income tax rate, which ranges from 10 percent to 37 percent depending on your total earnings and filing status.
Key Takeaways
- Sportsbooks report winnings to the IRS on Form 1099-NEC or 1099-MISC, and you must include that amount on your federal tax return.
- Your winnings are taxed as ordinary income at your regular tax rate, not at a special sports betting rate.
- Most states impose their own income tax on sports betting winnings, ranging from 6 to 13 percent depending on the state.
- You can deduct losses against winnings only if you itemize deductions and keep detailed records of every bet you placed.
- Winnings from unlicensed sources are still taxable income, even though they are not reported to the IRS by a third party.
How sportsbooks report your winnings to the IRS
Licensed sportsbooks in states where sports betting is legal are required to file Form 1099-NEC (or Form 1099-MISC in some cases) with the IRS for each customer who wins above a certain threshold. The threshold varies by state and by type of bet, but it is typically $300 or more for most wagers. You receive Copy B of the form by January 31 of the following year.
The form shows your total winnings for the year. It does not show your losses. This is important: the IRS sees only the gross amount you won, not your net profit after losses. You are responsible for reporting both the winnings and any losses you want to deduct.
If you won through multiple sportsbooks, you will receive multiple 1099 forms. You must report all of them on your tax return. The IRS cross-checks these forms against your return, so omitting one will likely trigger an audit notice.
Federal tax rates on sports betting income
Your sports betting winnings are added to your other income and taxed at your marginal tax rate — the rate that applies to your highest dollar of income. For the 2024 tax year, federal rates range from 10 percent to 37 percent depending on your filing status and total income.
If you earned $50,000 in salary and won $10,000 betting on sports, your taxable income becomes $60,000. That $10,000 is taxed at whatever rate applies to the $50,000–$60,000 range of your income bracket, not at a flat rate.
This means a large win can push you into a higher tax bracket. If you won $50,000, you might owe 22 percent or 24 percent on part of it instead of 12 percent, depending on your other income. Tax software or a tax professional can show you the exact amount.
State income taxes on sports betting
Most states that allow sports betting also tax the winnings. State tax rates vary widely. Illinois taxes sports betting winnings at 4.95 percent. New York taxes them at 8.75 percent. Pennsylvania taxes them at 36 percent on certain types of bets. Some states have no income tax at all, so residents pay only federal tax.
A few states do not yet tax sports betting income, but this is changing. Check your state's Department of Revenue website or contact them directly to learn the current rate where you live. If you moved during the year or won money in a state where you do not live, you may owe tax to both states.
State taxes are separate from federal taxes. You owe both. If you won $1,000 and your state tax rate is 8 percent and your federal rate is 22 percent, you owe $80 to the state and $220 to the federal government, for a total of $300 in taxes on the $1,000 win.
Deducting losses against winnings
You can deduct gambling losses, but only to the extent of your gambling winnings, and only if you itemize deductions on your tax return. You cannot deduct losses if you take the standard deduction, which most people do.
To deduct losses, you must keep detailed records: dates of bets, amounts wagered, amounts won or lost, and the name and location of the sportsbook or casino. A spreadsheet or betting app history is acceptable if it shows all four pieces of information. The IRS will ask for these records if you are audited.
If you won $5,000 and lost $3,000, you can deduct the $3,000 loss. Your net taxable winnings become $2,000. You still report the full $5,000 on your tax return (because that is what the sportsbook reported), but you also report the $3,000 loss as a deduction, and the two offset each other.
Winnings from unlicensed or offshore sportsbooks
Winnings from unlicensed sportsbooks, offshore sites, or private bets are still taxable income. The IRS does not care whether the bet was legal or whether a third party reported it. You are required to report it yourself.
Because no sportsbook reported your winnings to the IRS, there is no Form 1099 in the system. This does not mean you can skip reporting it. The IRS uses bank deposits, credit card statements, and other financial records to identify unreported income. If you deposited large sums from an offshore account or received wire transfers from a betting site, those transactions can be traced.
Failing to report gambling income is tax evasion. The penalty is 75 percent of the unpaid tax, plus interest, plus potential criminal charges. It is far cheaper to report the income and pay the tax owed.
How to report sports betting winnings on your tax return
If you received a Form 1099-NEC or 1099-MISC, report the winnings on Schedule 1 (Other Income) of Form 1040. Enter the amount from box 1 of the form. If you have losses to deduct, you report them on Schedule A (Itemized Deductions) under "Other Miscellaneous Deductions," but only if you itemize.
If you did not receive a 1099 form but won money through an unlicensed source, you still report it on Schedule 1 as "Other Income." Write a brief description so the IRS knows where it came from.
Tax software like TurboTax and H&R Block have fields for gambling income and losses. If you use a tax professional, bring all your 1099 forms and a record of any losses you want to deduct. They will handle the rest.
Frequently Asked Questions
Do I have to report small wins if I did not get a 1099 form?
Yes. The fact that you did not receive a 1099 does not mean the income is not taxable. You are required to report all gambling winnings, regardless of size. However, sportsbooks typically issue a 1099 only for wins above $300 or so, depending on the state.
Can I deduct losses if I use the standard deduction?
No. Gambling losses are only deductible if you itemize deductions on Schedule A. Most taxpayers use the standard deduction, which is simpler but does not allow you to deduct losses. You cannot do both.
What if I won money in a state where I do not live?
You may owe tax to both the state where you won and your home state, depending on their laws. Some states have reciprocal agreements. Contact the tax authority in both states to find out what you owe. A tax professional can help you file in multiple states if needed.
Do I owe taxes on money I won and then lost betting again?
Yes. The IRS taxes your winnings in the year you won them, not based on your net result at the end of the year. If you won $5,000 in January and lost it all by December, you still owe tax on the $5,000. You can deduct the losses only if you itemize deductions.
What happens if I do not report gambling winnings?
The IRS can assess a penalty of 75 percent of the unpaid tax, plus interest dating back to the year the income was earned. If the amount is large or the pattern is repeated, the IRS may pursue criminal charges for tax evasion. Reporting the income and paying what you owe is always the safer choice.