Sports Betting Taxes 2026: What Every Bettor Needs to Know Before Filing

Sports betting is booming. But with millions of Americans now betting legally, the IRS is paying close attention. If you placed bets in 2025 — whether on DraftKings, FanDuel, Polymarket, or anywhere else — your winnings are taxable income, and April 15, 2026 is the filing deadline.

Here is everything you need to know to file correctly and avoid problems with the IRS.

Are Sports Betting Winnings Taxable?

Yes, 100%. The IRS considers all gambling winnings — including sports betting, fantasy sports, casino games, and prediction markets — to be ordinary taxable income. This applies whether you receive a tax form or not. Even small wins technically need to be reported.

What Is Form W-2G?

A W-2G is the tax form a sportsbook or gambling site sends you (and the IRS) when you have a significant win. For 2025, the thresholds are:

• Sports betting / most gambling: Winnings of $600 or more AND at least 300x your wager
• Slot machines and bingo: $1,200 or more
• Keno: $1,500 or more
• Poker tournaments: $5,000 or more (net of buy-in)

Important: You must report ALL winnings even if you never receive a W-2G. The $600 threshold is when the payer is required to issue a form — not the threshold for taxability. A $200 win is still taxable income you are legally required to report.

Federal Tax Rates on Gambling Winnings

Gambling winnings are taxed at your ordinary income tax rate — the same rate as your job income. For 2025:

Taxable Income (Single)	Federal Rate
Up to $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%

Can You Deduct Gambling Losses?

Yes — but with major restrictions that trip up most bettors:

1. You must itemize deductions. The 2025 standard deduction is $15,000 (single) or $30,000 (married filing jointly). Most people take the standard deduction, which means gambling losses are not deductible for them.
2. Losses can only offset winnings. You cannot use gambling losses to reduce other income. If you won $5,000 and lost $7,000, you can deduct $5,000 — but you cannot create a $2,000 deduction from the extra losses.
3. You need records. The IRS requires documentation: bet slips, app statements, bank records. A running log of wins and losses with dates is essential.

State Taxes on Sports Betting Winnings

Every state with legal sports betting treats winnings differently. Key states for 2025:

• New Jersey: Taxed as ordinary income at NJ rates (1.4% to 10.75%). NJ does NOT allow gambling loss deductions on the state return — you pay tax on gross winnings regardless of losses.
• New York: 4% to 10.9% state rate. NY withholds 10.9% on large payouts. No loss deductions.
• Pennsylvania: Flat 3.07% state income tax on gambling winnings.
• Nevada: No state income tax — keep everything above federal.
• Florida, Texas, Wyoming: No state income tax.

How to File: Step by Step

1. Gather all W-2G forms — Check your email and sportsbook account. Most platforms post tax documents in January.
2. Pull your full win/loss statement — DraftKings, FanDuel, and most major books offer downloadable annual statements.
3. Report total winnings on Form 1040, Schedule 1 (Line 8b: "Gambling").
4. If itemizing: Report losses on Schedule A under "Other Itemized Deductions."
5. File state taxes separately — include gambling income per your state's rules.

What About Prediction Markets Like Polymarket?

Prediction market winnings — on Polymarket, Kalshi, or similar platforms — are also taxable. The IRS currently treats them as gambling income (same rules apply). Since prediction markets are newer, they may not issue W-2G forms automatically, but your obligation to report remains. Keep records of every trade.

The One Thing Every Bettor Should Do Right Now

If you are not tracking your bets with dates, amounts, and outcomes, you are flying blind at tax time — and potentially paying more than you owe. Our free Bet Tracker logs everything automatically. Start now, file with confidence in April.

Turn Your Winnings Into Long-Term Wealth

Once you have your tax situation handled, the next move is making sure your net profits actually grow. Here are the tools sharp bettors use: