With online sports betting and gambling more accessible than ever, it’s important to understand how your winnings may affect your taxes.
Sports betting is now legal in 47 states plus Washington, D.C., and sports betting hit a record $16.69 billion in revenue in 2025.
If you’ve placed bets or won money, here’s what you need to know about taxes on gambling winnings.
Do you need to report gambling winnings?
According to the Internal Revenue Service, gambling wins are considered taxable income. Depending on how you file your taxes, you’ll be required to report your winnings on Form 1040 or Form 1040-SR as a part of your “other income.” Typically, when you win at least $600 and the payout is at least 300 times the amount of your wager, you’ll receive Form W-2G from the casino, lottery or other payer.
Can you deduct gambling losses?
Generally, the answer to this is yes. But it does come with a few caveats. If you itemize your deductions on Schedule A of Form 1040 and you kept a record of your winnings and losses, you can deduct your gambling losses. It is important to know that you cannot deduct more than the amount of gambling income you reported on your return.
Do you have to pay taxes upfront?
This depends on the amount of money you win. If you win more than $5,000 on a wager, and the payout is at least 300 times the amount of your bet, you’ll be required to withhold 24% for income taxes. You also may be required to pay state or local taxes on the money you win.
Other important considerations
If you’re betting through a sportsbook or casino, they are required to keep records of your winnings and losses and will report this information to the IRS at the end of each year. Additionally, if you’re a professional gambler, you may be required to file a Schedule C form – this is how self-employed individuals report their income to the IRS. Professional gamblers may also report losses, but they must be reported as a business expense.
How ARAG Can Help
If you are enrolled in a legal plan through ARAG, you may be able to work with a network attorney who can help you address and resolve state and local tax collection, state and local tax audits, federal IRS tax collection and federal IRS tax audits. In addition, you may have access to additional tax services from experienced tax specialists.