Gambling winnings and taxes in the US

Yes: in the US, gambling winnings — including sports betting — are taxable income, and the IRS says you must report all of them, including winnings no one sent you a form for. Losses can reduce that income only if you itemize deductions and have records, and never below zero: the deduction is capped at your winnings. For tax years beginning after December 31, 2025, the deduction is further limited to 90% of your losses. This page is general information, not tax advice. Your situation depends on your state, your other income and how you file, so talk to a tax professional before you rely on any of it.

Winnings are income whether or not you get a form

IRS Topic 419 defines gambling income to include winnings from sports betting, and says you report all of it on Form 1040 via Schedule 1, including winnings not reported on a Form W-2G. A sportsbook not sending you a form does not make the money untaxed; it only means nobody else reported it.

When a sportsbook sends a W-2G

Under the Form W-2G instructions (revised January 2026), a payer files a W-2G for sports wagering winnings that meet the reporting threshold AND are at least 300 times the amount wagered. For payments made in 2026 the minimum threshold is $2,000, and from then on it is adjusted for inflation each year. Federal income tax of 24% is withheld when the winnings minus the wager exceed $5,000 and are also at least 300 times the wager. The 300-times test means ordinary straight bets and most hedges never produce a W-2G at all — they are still taxable.

How losses are deducted

IRS Topic 419: you may deduct gambling losses only if you itemize on Schedule A and kept a record of your winnings and losses, and the losses you deduct can't exceed the gambling income you reported. If you take the standard deduction, your losses do nothing for you and you are taxed on your gross winnings. That surprises most people who have never itemized.

The 90% limit from 2026

The 2025 reconciliation law, Public Law 119-21 (commonly called the One Big Beautiful Bill Act), amended section 165(d) of the Internal Revenue Code. For taxable years beginning after December 31, 2025, the deduction for wagering losses equals 90% of those losses and is still allowed only up to your gambling gains. Someone who wins and loses exactly the same amount can therefore owe tax on 10% of their losses. Bills to restore the full deduction have been introduced in Congress, so check the rule in force for the year you are filing.

Why this hits hedgers hardest

Advantage betting creates large winnings and large losses that nearly cancel. Every hedged pair produces a winning leg and a losing leg, and the tax rules see both. Take the bonus bet from how to convert bonus bets: a $100 bonus bet at +400 wins $400 and the $327.27 hedge loses. You kept $72.73, but on the general rule described above your gambling winnings were $400. The matched betting taxes guide goes further into promo-heavy years.

Records the IRS expects

Topic 419 asks for an accurate diary or similar record of your winnings and losses, plus receipts, tickets, statements or other records that show both. For online betting, that means a log of every bet and the books' own transaction histories. Download those histories every year — an account that is closed or limited later may be harder to get records out of. The bet tracking guide lists what to record.

State taxes and professionals

States treat gambling winnings differently: whether they tax them, whether losses reduce the tax, and which state can tax a bet placed while you were travelling all vary. People who bet as a business may be able to file as professional gamblers, which follows different rules. Both are areas where the answer depends on your facts, so ask a tax professional or your state's revenue department.

Keeping the record in TrueEdge

The Bet Tracker keeps every logged bet with its book, odds, stake, funding and result, and the date it settled, which is the diary half of the record. It does not prepare tax figures, and it only knows bets you logged, so keep your books' own statements too. The walkthrough covers correcting a settlement date so money lands in the right year.