Written by:
Alex Windsor
Fact checked by:
Oliver Dickinson
Updated:
April 26, 2024

Sports Betting Taxes by State

Sports Betting Taxes by State

One of the main reasons for the Supreme Court overruling the Professional and Amateur Sports Protection Act (PASPA) was for the potential taxes legalized sports betting could generate for a state. And in hindsight, they were spot on. Since being struck down, over $2 billion has been generated in tax revenue from legalized sports betting in the US.

However, despite there being so much money involved, there’s still a lot of confusion surrounding how taxes are handled when it comes to sports betting. How much does each state pay? Do I need to declare my winnings? The average player doesn’t know the answer to these questions. So with tax season looming, we’ve decided to produce a one-stop for everything you need to know when it comes to taxes and sports betting.

State-By-State Sports Betting Tax Rate

The way each state will tax sports betting varies wildly from state to state. Though to help you out, the below table will give you all the relevant information you need to know.

🇺🇸 State📜Model%Tax Rate
ArizonaMultiple, mobile and retail10% online, 8% retail
ArkansasMultiple, retail only13% of first 150 million then 20%
ColoradoMultiple, mobile and retail10%
ConnecticutMultiple, mobile and retail18% online, 13.75% retail
DelawareLottery monopoly
50%
IllinoisMultiple, mobile and retail15%
IndianaMultiple, mobile and retail9.50%
IowaMultiple, mobile and retail6.75%
LouisianaMultiple, mobile and retail15% online, 10% retail
MarylandMultiple, mobile and retail15%
MichiganMultiple, mobile and retail8.40%
MississippiMultiple, retail only12%

MontanaLottery monopolyRevenue minus management fees
NebraskaRetail only20%
NevadaMultiple, mobile and retail
6.75%
New HampshireLottery monopoly51%
New JerseyMultiple, mobile and retail14.25%
New MexicoMultiple, retail onlyN/A
New YorkMultiple, mobile and retail51%
North CarolinaTribalRevenue minus expenses
OhioMultiple, mobile and retail10%
OregonLottery monopolyRevenue minus management fees
PennsylvaniaMultiple, mobile and retail36%
Rhode IslandLottery monopoly51%
South DakotaRetail only9%
TennesseeMultiple, mobile only20%
VirginiaMultiple, mobile and retail15%
WashingtonTribalTBD
West VirginiaMultiple, mobile and retail10%
WyomingMobile only10%
District of ColumbiaLottery monopoly online, multiple retail10.00%

All information from the table above has been sourced from the Tax Foundation.

Key Takeaways

Do You Have To Pay Tax on Sports Betting Winnings?

Of course while the above is important, what most players want to know is if they have to pay taxes on winnings bets — and if so, how taxes will affect them. The short answer is yes. You do have to pay taxes on all winnings.

There is an incorrect rumor floating about that you only pay taxes on winnings of more than $600 — however, this just isn’t true. 100% of the money you make from winning sports bets is eligible to be taxed. This incorrect information likely comes from what the obligation of the sportsbooks are — and that is that they are required to report all winnings of $600+, or winnings that are x300+ the initial stake.

Exactly what percentage of your winnings you need to pay though will depend on what your total income for the year is. That’s because as far as the government is concerned, money that you make from sports betting is just another form of income that needs to be taxed. And it’s not just for sports betting. Any money that you make from gambling — whether it’s online or in-person, at a sportsbook or through a casino, or even won through a lottery or gameshow, must be declared on your tax return, and you must pay tax on it. This also extends to non-cash prizes. For example, in the event that you win a car, you must pay tax on the market value of it.

Depending on who you bet with, you may receive a W-2G or some other form that you’re required to declare your winnings on. Though regardless of which form you get (if any), you’ll still need to declare your winnings on your 1040 Form.

As can be seen in the above picture, gambling income is to be declared in the first part of your 1040 Form under line 8b. And as another form of income, it’ll be taxed at the federal level between 10-37%, depending on your other income. For state and local taxes, it gets a little more tricky. As such, we recommend you check with your state’s tax office for up-to-date information on whether or not your winnings are taxable and what percent you need to pay.

Another critical thing to keep in mind though, is that while you do need to declare your winnings, you are allowed to subtract your initial stake from that number. So if you bet $100 and win $1,000 — you only declare $900. $1,000 – $100. But that’s not the only thing you can deduct. Because as we’ll go into more in the next section, you are eligible to deduct losses from your taxable income.

Can You Deduct Losses?

Having to pay taxes on your winnings can definitely be a bit of a kick in the teeth. But it’s not all bad. Just like you must declare winnings, you can also declare losses as a deduction. However, there are some caveats.

So for an example of how this looks in practice, let’s assume you made $1,000 worth of wagers over the year made up of x10 $100 bets at +100 odds. Six of these bets you won — returning $1,200. While the other four you lost. First thing, you can deduct your initial stake from your winnings — which leaves you with $600 worth of winnings. From these winnings, so long as you itemize your deductions, you can take away a further $400 as losses. This leaves $200. And this $200 is what you will have to end up paying tax on at the end of the financial year.

Summary

When it comes to sports betting, everyone pays taxes. Fortunately though, unless you’re in charge of accounting for a sportsbook, it’s pretty easy to work out how much you need to pay. That’s because in the federal government’s eyes, money made from gambling is taxed in the same way as regular income. Just make sure to itemize your taxes to ensure that you can also add your gambling losses as a deduction.

  • Which states charge the highest tax rate on sportsbooks?
    For state tax rates charged to sportsbooks, Rhode Island & New York currently charge the most. Both currently charge 51% on all revenue. However, Pennsylvania is also pretty high at 36%.
  • Do I have to declare my sportsbook winnings on my tax return?
    All winnings must be declared on your tax return. Even if a sportsbook doesn’t provide you with any paperwork, you must declare all winnings on your 1040 Form.
  • Is it possible to deduct sports betting losses on my tax return?
    It is possible to include sports betting losses as part of a deduction on your tax return — but it can be a little tricky. To start with, you must itemize your deductions. Secondly, you can only claim deductions up to the amount of your winnings. So if you won $1,000 but lost $1,500, you can only claim $1,000 worth of deductions to offset your winnings.
  • Will I have to fill in the paperwork, or will the sportsbook do it?
    Typically, for small wins the sportsbook won’t fill out any paperwork and it will be up to you to do it. However, for larger wins the sportsbook will usually provide a W-2G and may even withhold some of your winnings. Don’t worry though. If it turns out they held too much, you’ll be able to claim it back as part of your tax refund. Regardless though, you’ll need to include your winnings on your 1040 Form.
  • Which state has the lowest sports betting tax rate?
    The lowest tax rate currently belongs to Iowa and Nevada. Both states only charge sportsbooks a tax rate of 6.75%. For comparison, this is 44.25% lower than the tax rates of both Rhode Island and New York.
  • What type of income do I mark winnings from sports betting under?
    Any money made from gambling must be included under Other Income: Gambling. You’ll be able to find the relevant line in the first section of your 1040 Form at line 8b.
  • Do I need to pay taxes on gambling winnings at a state or local level?
    Whether or not you’ll need to pay taxes on your sports betting winnings at the state or local level will depend on where you live and what your local laws are. As such, we recommend that you check with your state’s tax office to see if you need to pay tax on your winnings.
AUTHOR
Alex Windsor

Alex is the Head of Content here at Minimum Deposit Betting Sites, leveraging his immense experience in the sports betting and iGaming industry to steer the boat and make sure all of our content is up to par and of the best possible quality.