Gambling Taxes Guide 2025–2026: W‑2G, Reporting, Deductions, Records, and Forthcoming Changes

Did you hit a big parlay or score a jackpot at the casino? Congratulations! But before you celebrate, there’s one important player you need to account for: Uncle Sam. This complete gambling taxes guide is your go-to resource for the 2025-2026 tax seasons.

We’ll break down everything you need to know in simple terms, whether you’re a sports bettor, a daily fantasy sports (DFS) pro, a casino visitor, a lottery player, or even a crypto gambler. Understanding these rules is more important than ever, as the IRS is paying closer attention to gambling income.

This guide will help you report winnings, deduct losses, and stay out of trouble.

With the rise of legal sports betting and online casinos, more people are winning—and more people are getting confused about taxes. This guide cuts through the noise. We’ll cover what counts as income, when you’ll get a tax form, how to keep records, and what to watch for with the new tax rules for 2025 and beyond.

Understanding Gambling Income: What Is Taxable in 2025?

First things first: what does the IRS consider gambling income? The simple answer is almost any money you win from a game of chance or a wager. It doesn’t matter if you won it online from your couch or at a fancy casino in Las Vegas. If you won it, it’s taxable.

This includes winnings from:

• Sports Betting (parlays, single bets, futures)
• Casino Games (slots, blackjack, roulette, craps)
• Poker Tournaments and Cash Games
• Lotteries and Raffles
• Horse Racing
• Daily Fantasy Sports (DFS)
• Bingo and Keno
• Game Shows
• Crypto Gambling

Even non-cash prizes, like a car or a vacation, are considered income. You must report their fair market value. This is a key part of understanding how to report gambling winnings and losses in 2025. The IRS views all these winnings as part of your total income for the year, which is why keeping track of your gambling income and losses is so important. Your total winnings are reported on your tax return, and we’ll discuss how to handle losses later in this gambling taxes guide.

Types of Gambling and Reporting Triggers

Different types of gambling have different reporting triggers. For example, a big slot win might automatically generate a tax form, while your season-long fantasy football winnings might not. The key is knowing that even if you don’t receive a form, you are still legally required to report all your gambling income. For online platforms, your win/loss statements are crucial pieces of documentation. For retail betting, keeping ticket stubs and receipts is a must.

W‑2G Tax Forms Explained: Your Guide to Gambling Taxes

The Form W-2G, “Certain Gambling Winnings,” is the most common tax form you’ll see. Think of it as a heads-up to both you and the IRS that you had a significant win. You won’t get one for every winning bet, only when your winnings cross certain thresholds for W-2G.

Here are the 2025-2026 thresholds that trigger a W-2G:

• $1,200 or more from Bingo or Slot Machines.
• $1,500 or more in winnings (reduced by the wager) from Keno.
• More than $5,000 in winnings (reduced by the wager or buy-in) from a Poker Tournament.
• $600 or more from any other type of gambling (like sports betting), but only if the winnings are at least 300 times the amount of the wager.

If you hit one of these jackpots, the casino or sportsbook will ask for your Social Security number and ID. They will then send a copy of the W-2G to you and the IRS. Sometimes, they may even be required to withhold taxes on the spot. The standard withholding rate is 24% of your winnings. This is an important part of how sports betting taxes work for large payouts.

When Do Sportsbooks and Casinos Send Tax Forms?

A common question is, “do sportsbooks send tax forms?” The answer is yes, but only if you meet the thresholds mentioned above. Many smaller, regular wins won’t trigger a W-2G. However, some online operators might issue a Form 1099-MISC or 1099-K if your net earnings for the year exceed $600, which is a separate reporting requirement. Here’s a simple table to clarify:

Game/Bet Type	Win Amount	Win-to-Bet Ratio	Form Issued?
Slot Machine	$2,000	N/A	Yes, W-2G
Sports Bet	$1,000	100x ($10 bet)	No W-2G (Ratio less than 300x)
Sports Bet	$1,500	300x ($5 bet)	Yes, W-2G
Poker Tournament	$6,000 (net)	N/A	Yes, W-2G
Online Sportsbook (Net Profit for Year)	$750	N/A	Maybe, 1099-MISC/K

Remember, the responsibility to report gambling winnings is yours, form or no form.

How to Report Gambling Winnings and Losses (Step-by-Step): A Gambling Taxes Guide

Okay, you have your winnings and maybe a W-2G. Now what? Reporting it on your tax return is a two-part process: reporting your income and, if possible, deducting your losses.

1. Report All Winnings as “Other Income”: Your total gambling winnings for the year go on Schedule 1 of your Form 1040. This includes winnings from W-2Gs and all other undocumented wins. This is the first step to properly report gambling winnings.
2. Determine if You Can Deduct Losses: This is where it gets tricky. You can only claim gambling losses if you itemize your deductions on your tax return. You cannot take the standard deduction and also deduct gambling losses.
3. Itemize Deductions on Schedule A: If you choose to itemize, you can list your total gambling losses for the year on the “Other Itemized Deductions” line of Schedule A.

Crucial Rule: You can only deduct losses up to the amount of your winnings. If you won $5,000 but lost $8,000, you can only deduct $5,000. You cannot use the extra $3,000 loss to reduce your other taxable income (like your salary). This answers the question, “can gambling losses offset winnings?” Yes, but only up to the amount you won.

Gambling Losses and Deductions: What Can Be Written Off?

To deduct gambling losses, you need proof. The IRS requires excellent record-keeping. This is where the concept of “session logging” comes in. Instead of tracking every single bet, the IRS allows you to calculate your win or loss on a per-session basis.

A “session” is generally defined as a continuous period of play at one type of game in one location. For example:

• Your three hours at a blackjack table is one session.
• Your afternoon playing slots at one casino is one session.
• Your day of betting on NFL games on a single sportsbook app could be considered one session.

Using the sessionization method simplifies things. If you start a slot session with $200 and end with $150, you have a $50 loss for that session. If you end with $300, you have a $100 win. You must keep contemporaneous records—meaning, you record this information at the time of play, not weeks later. A simple diary of gambling activity is one of the best tools for this.

Practical Examples and Common Scenarios

Let’s look at an example. In 2025, Sarah:

• Wins a $2,000 slot jackpot (and gets a W-2G).
• Wins $500 from various sports bets on DraftKings.
• Loses $3,000 over the year playing blackjack and other sports bets.

How Sarah reports this:

1. She reports total winnings of $2,500 ($2,000 + $500) on her tax return.
2. She chooses to itemize her deductions.
3. She can deduct her losses up to the amount of her winnings. So, she can deduct $2,500 of her $3,000 in losses.

Without detailed records of her losses, she would have to pay tax on the full $2,500 of winnings and get no deduction.

Record-Keeping Best Practices for Gamblers: A Key Part of Your Gambling Taxes Guide

The IRS is not going to just take your word for it. If you want to deduct losses, you need proof. This is the most important—and most overlooked—part of managing your gambling taxes. Here’s what records to keep for gambling losses.

Your Gambling Diary: The Ultimate Tool

The best practice is to keep a detailed diary or log. Your log should include:

• Date of your gambling activity.
• Type of gambling (e.g., Blackjack, NFL bets, Slots).
• Location of the gambling (Casino name, website URL).
• Amount you won or lost during the session.
• Supporting Documents: Note any W-2Gs, tickets, or statements related to that session.

This diary of gambling activity is your best defense in an audit.

Creating Audit-Proof Documentation

Beyond your diary, you should keep all related documents. This creates a paper trail that is hard to dispute.

• W-2G Forms: Keep every one you receive.
• Wagering Tickets/Slips: Especially for retail sports betting and horse racing. Keep both winning and losing ticket stubs.
• Win/Loss Statements: Most casinos and online sportsbooks provide these. They are a good summary but are not always enough on their own. The IRS prefers your personal, contemporaneous records.
• Bank and Credit Card Statements: Show ATM withdrawals at a casino or deposits/withdrawals to an online account history.
• Crypto Records: For crypto gambling records, you need detailed transaction histories from the gambling site and your crypto exchange, showing dates, amounts, and the crypto’s value at the time of the transaction (basis tracking).

A key audit red flag is claiming large losses with no documentation to back them up. Keep these records for at least three years after you file your taxes, as that’s the typical window for an audit.

State vs. Federal Gambling Taxes: What to Know in 2025–2026

Just when you thought you were done, you also have to consider state tax considerations. Most states with an income tax also tax gambling winnings. However, the rules can vary wildly.

• State Conformity: Some states follow federal rules for deducting losses, while others don’t. For example, states like Connecticut, Illinois, and Ohio do not allow you to deduct any gambling losses. In these states, you pay tax on every dollar you win, regardless of how much you lost.
• Residency Rules: You generally pay tax on all your winnings to your home state.
• Nonresident Filing: If you live in one state but win a large jackpot in another, you may have to file a nonresident filing tax return in the state where you won. For example, if you live in Texas (no state income tax) but win $10,000 at a casino in Louisiana, you will owe Louisiana state tax on those winnings.

This gets complicated when you engage in online vs retail reporting across state lines. Always check the specific rules for your state and any state you gamble in.

Special Cases: Nonresidents, Pro Gamblers, and Hobbyist Context

For most people, gambling is a hobby, and the “hobby loss” rules apply (you can’t deduct losses against other income). However, a small number of people qualify for professional gambler status basics. A pro gambler can deduct losses and other business expenses (like travel and research) on a Schedule C. However, this status is very difficult to achieve and often invites IRS scrutiny. For nonresidents, the key is to understand the filing requirements of the state where you won money to avoid penalties.

Crypto Gambling Taxes and Digital Records: 2025–2026 Updates

Crypto gambling adds another layer of complexity. The IRS treats cryptocurrency as property, not currency. This means every transaction can be a taxable event.

Here’s how it works:

1. Depositing Crypto: If you deposit Bitcoin (BTC) into a gambling site, that’s not a taxable event itself.
2. Placing a Bet: When you wager crypto, you are “disposing” of it. If the crypto’s value has gone up since you acquired it, you have a capital gain. If it has gone down, you have a capital loss. This is separate from your gambling win/loss.
3. Winning a Bet: Your winnings are paid in crypto. The fair market value of the crypto at the moment you receive it is your gambling income. This value also becomes your “cost basis” for that crypto.

Keeping detailed crypto gambling records is essential. You need to track the date, amount, and USD value for every single transaction. Use exchange records and wallet transaction histories. New regulatory updates are focusing more on digital assets, so expect more scrutiny here.

Withholding Rates, Changes, and 2026 Preview

For 2025, the federal backup withholding rate on large wins remains at 24%. Some states also have their own withholding requirements. Looking ahead, there is talk of potential gambling tax changes 2026. One proposal that has been discussed in the past is lowering the reporting threshold for slots and other games. While nothing is set in stone, it highlights the need to stay informed. Always check for the latest regulatory updates before the tax season begins.

Your 2025–2026 Gambling Taxes Compliance Checklist