Taxes on sports betting winnings are the most under-discussed topic in the entire betting space. Most guides skip this entirely or give it a single paragraph. We will cover it properly, because if you are winning meaningful money — at any book, regulated or offshore — the IRS expects you to report it.
Federal Tax Rules for Sports Betting
Under Internal Revenue Code §61, all gambling winnings are taxable income. It does not matter whether you won at FanDuel, BetOnline, in a Las Vegas sportsbook, or at a Super Bowl office pool. Winnings are ordinary income, taxed at your marginal rate (10%–37% depending on your total income).
Regulated US sportsbooks are required to issue a W-2G form when your net winnings from a single bet are $600 or more at odds of 300:1 or greater. Some books apply the threshold more broadly. The W-2G gets reported to the IRS — you cannot skip it. For offshore books operating outside the US, there is no W-2G and no automatic IRS reporting. But this does not mean you are off the hook. You are still legally required to report all gambling winnings on your federal tax return — on Schedule 1 (Additional Income and Adjustments), which feeds into your Form 1040. "The book did not send me a form" is not a legal defence.
On withholding: regulated books may withhold 24% of large winnings automatically (federal backup withholding). Offshore books withhold nothing. If your offshore winnings are significant, you may owe estimated quarterly taxes (Form 1040-ES) to avoid an underpayment penalty when you file. The IRS generally expects estimated payments if you will owe $1,000 or more at filing.
Gambling losses can offset your gambling winnings, but only if you itemize deductions on Schedule A. If you take the standard deduction — as most Americans do — you cannot deduct losses. And even if you itemize, losses can only offset winnings; you cannot use gambling losses to reduce other income. Keep every record.
State Taxes on Sports Betting
State income taxes on sports betting winnings follow the same principle as federal: winnings are ordinary income. If your state has an income tax, it applies to gambling winnings. A few standouts:
No-income-tax states — Texas, Florida, Nevada, Wyoming, South Dakota, Alaska, and New Hampshire have no state income tax, so no state tax on sports betting winnings. Nevada has no state income tax but has local gaming regulations; online offshore betting from Nevada exists in a grey area.
New York has the heaviest combined burden of any major state: up to 10.9% state income tax, up to 3.876% New York City tax, plus 24% federal — a combined marginal rate exceeding 38% for high earners. A $10,000 net winning year in NYC means paying $3,800+ in taxes before expenses. New York bettors who are also exploring offshore books need to factor this in.
New Jersey taxes gambling winnings at 3% up to $20,000, then up to 10.75% for income above $1 million. Pennsylvania taxes gambling winnings at a flat 3.07%. Colorado has a flat 4.4% state income tax rate.
Keep detailed records of every bet: date, sportsbook, event, bet type, amount wagered, odds, and result. This is not optional if your winnings are meaningful — it is the only way to substantiate deductions if audited, and it is the only way to accurately calculate your net position across a season.
Record-Keeping and the IRS
Offshore books will not do your paperwork. There are no W-2Gs, no end-of-year summaries sent to the IRS, and at many books no easy way to export a full transaction history unless you maintain it yourself. The IRS recommends a contemporaneous gambling diary: record each session or bet with the date, the name of the establishment (or website), the type of wager, the amount wagered, and the amount won or lost. A simple spreadsheet with these columns is sufficient.
Most major tax software — TurboTax, H&R Block, FreeTaxUSA — has a dedicated gambling income worksheet. Enter your total winnings and losses and the software will handle placement on the right forms. If your annual net gambling winnings exceed $5,000, or if you are betting at a volume where you might qualify as a professional gambler (which has its own tax treatment under Schedule C), consult a CPA or enrolled agent who has experience with gambling income.
Disclaimer: Table Stakes is not a tax adviser. The information above is general in nature and reflects our understanding of US tax law as of 2025. Your personal tax situation may differ. Consult a qualified tax professional for advice specific to your circumstances.