Gambling winnings are income, and the IRS wants its share. Understanding tax obligations helps you avoid surprises and potentially reduce what you owe. Here's what every gambler needs to know.
The Basic Rule
All gambling winnings are taxable income.
This includes:
- Casino games (slots, table games, poker)
- Lottery and raffles
- Horse racing and sports betting
- Bingo and keno
- Fantasy sports
- Online gambling
The IRS doesn't care whether you won $5 or $5 million—it's all taxable. You're legally required to report all gambling income, even if the casino doesn't.
When Casinos Report Your Winnings
W-2G Thresholds
Casinos issue W-2G forms to you and the IRS when winnings exceed certain amounts:
| Game | Threshold | Additional Conditions |
|---|---|---|
| Slots, bingo, keno | $1,200+ | None |
| Keno | $1,500+ | None |
| Poker tournaments | $5,000+ | Reduced by buy-in |
| Table games | $600+ | Must also be 300:1 odds |
| Sports betting | $600+ | Must also be 300:1 odds |
Example: You win $2,000 on a slot machine. The casino will issue a W-2G and may ask for your SSN before paying.
Example: You win $800 at blackjack. No W-2G (under threshold and not 300:1 odds), but it's still taxable income you must report.
What the W-2G Contains
- Your name, address, SSN
- Type of gambling
- Winnings amount
- Federal tax withheld (if any)
- State tax withheld (if any)
You'll receive a copy; the IRS gets one too.
Tax Withholding on Gambling Winnings
Casinos withhold federal taxes in certain situations:
Mandatory 24% withholding:
- Winnings over $5,000 (after subtracting wager for poker/sports)
- You didn't provide SSN/TIN
- Backup withholding was triggered
No automatic withholding:
- Most casino wins between thresholds
- Wins where you provided valid SSN
- Many slot and table game wins
Important: Just because taxes weren't withheld doesn't mean you don't owe them.
How Gambling Income Is Taxed
Federal Taxes
Gambling winnings are taxed as "other income" at your regular income tax rate:
| Tax Bracket (2025) | Rate |
|---|---|
| $0 - $11,925 | 10% |
| $11,926 - $48,475 | 12% |
| $48,476 - $103,350 | 22% |
| $103,351 - $197,300 | 24% |
| $197,301 - $250,525 | 32% |
| $250,526 - $626,350 | 35% |
| Over $626,350 | 37% |
Example: You're in the 22% bracket and win a $10,000 jackpot. You'll owe approximately $2,200 in federal taxes (before deductions).
State Taxes
Most states tax gambling winnings as regular income. Notable exceptions:
- Nevada: No state income tax
- Florida: No state income tax
- Texas: No state income tax
- California: Taxes gambling income
- New York: Taxes gambling income
Check your state's rules—rates vary from 0% to over 10%.
Deducting Gambling Losses
The Basic Rule
You can deduct gambling losses—but only up to your gambling winnings.
Example:
- Winnings: $5,000
- Losses: $8,000
- Deductible losses: $5,000 (limited to winnings)
- Net taxable gambling income: $0
You can't use gambling losses to reduce other income.
Itemizing Required
To deduct losses, you must itemize deductions on Schedule A. This only helps if your total itemized deductions exceed the standard deduction:
2025 Standard Deduction:
- Single: $15,000
- Married filing jointly: $30,000
If your total itemized deductions (including gambling losses) don't exceed these amounts, you won't benefit from the loss deduction.
Documentation Requirements
The IRS requires records to support loss deductions:
What to document:
- Date and type of gambling activity
- Name and address of casino/establishment
- Names of others with you
- Amounts won and lost
Acceptable documentation:
- Casino win/loss statements
- Credit card and bank records
- Tickets, receipts, statements
- Personal diary/log
Casino Win/Loss Statements
Most casinos provide annual win/loss statements to player's club members. These show:
- Total amount wagered
- Total wins
- Total losses
- Net result
Request these statements before tax season. They're typically available in January/February.
Special Situations
Poker Winnings
Tournaments:
- W-2G issued for net winnings over $5,000
- Net = Prize minus buy-in
- Travel and tournament expenses may be deductible for professionals
Cash games:
- No automatic reporting (no W-2G typically)
- Still fully taxable
- Track wins and losses yourself
Sports Betting
Federal taxes: Same as other gambling—all winnings taxable.
W-2G issued: For wins of $600+ at 300:1 odds or higher (rare for sports bets).
Record keeping: Keep betting slips, account statements, and records of all wagers.
Professional Gamblers
If gambling is your trade or business:
- Report income on Schedule C
- Deduct expenses (travel, software, training)
- Subject to self-employment tax (15.3%)
- Can deduct losses beyond winnings against other income
IRS criteria for professional status:
- Primary income source is gambling
- Conduct activity in businesslike manner
- Keep extensive records
- Devote substantial time to gambling
Most recreational gamblers don't qualify—and shouldn't claim to.
Group Gambling
When you win as part of a group:
- Person who placed the bet receives W-2G
- Winnings should be divided and reported by all members
- Each person reports their share
Proper documentation:
- Written agreement before gambling
- W-2G in one person's name
- Form 5754 to allocate to group members
International Visitors
Non-resident aliens gambling in the US:
- 30% federal withholding on most winnings
- May be reduced by tax treaty
- Some winnings exempt (blackjack, craps, baccarat)
- Can file Form 1040NR to claim refund if applicable
Common Tax Mistakes
Not Reporting Small Wins
Just because no W-2G was issued doesn't mean it's not taxable. The IRS expects you to report all gambling income.
Overstating Losses
Loss deductions must be documented. The IRS audits gambling losses more than you'd think. Having proper records protects you.
Netting Wins and Losses
Wrong: "I won $5,000 and lost $3,000, so I only report $2,000."
Right: Report $5,000 as income on Form 1040. Deduct $3,000 on Schedule A (if itemizing).
Forgetting State Taxes
Federal taxes aren't the whole story. Many states tax gambling winnings, sometimes at high rates.
Record Keeping Best Practices
Keep a Gambling Log
Record for every session:
- Date
- Location
- Type of gambling
- Starting and ending bankroll
- Winnings or losses
- W-2G forms issued
Save Everything
Keep for at least three years (longer if audited):
- W-2G forms
- Win/loss statements
- Bank and credit card statements
- Tickets and receipts
Use Technology
- Photograph receipts
- Track with spreadsheets
- Request electronic win/loss statements
- Use gambling log apps
Planning for Taxes
Estimated Payments
If you win a large amount and no tax is withheld, you may need to make estimated tax payments to avoid penalties.
When required:
- Expect to owe $1,000+ at filing
- Previous year's tax liability wasn't fully covered by withholding
Year-End Planning
In November/December:
- Review YTD gambling wins and losses
- Consider timing of play (shift wins/losses between tax years if beneficial)
- Request win/loss statements early
- Consult a tax professional for large amounts
Professional Help
Consider a CPA or tax professional if:
- Gambling winnings exceed $10,000
- You claim significant losses
- You gamble professionally
- Your tax situation is complex
The cost of professional advice often saves more than it costs.
The Bottom Line
Gambling winnings are taxable. Losses are deductible (to the extent of winnings) only if you itemize. Documentation is essential.
Your responsibilities:
- Report all gambling income
- Keep records of wins and losses
- Request casino win/loss statements
- Pay taxes owed (or estimated payments)
- Consider professional help for large amounts
The IRS takes gambling income seriously. Proper planning and documentation ensure you pay what you owe—but not more.