If you make a lot of wagers on sporting events throughout the year, you may wonder about the tax implications. First off, let me say that our beloved Internal Revenue Service wants all money transactions reported. But that’s impractical, so they never go after the small stuff. What they do go after are gambling winnings that far exceed the chance that you will walk away a loser on any given day. This is any bet that returns 300-1 odds or more. Of course, this is never going to happen on any regular sports wager, but it can be true for the parlay cards or teaser bets found in a sports book.
If you find yourself lucky (or skillful) and you hit a parlay card worth more than 300 times your wager, you will find yourself filling out a W-2G form. A copy of this will be sent to the IRS, and you should keep a copy for your own records because come tax time, if you don’t report it, the IRS will remind you of your oversight. If you collect more than $5,000 at the same time you hit at 300-1 or more, the casino will withhold 24% of your money. Some of this you may get back after you file your taxes, but that will depend upon your income and deductions. Always consult with a tax accountant.
So to sum up, if you win at 300-1, you will have to sign for it, and if you hit a 300-1 or more and collect greater than $5,000, they will withhold 24%. But this is in Nevada, where we do not have a state income tax. If you live in a state with a state income tax, they may hold additional money; I don’t know. I’ve lived in Nevada for many years, and I only need be concerned about the federal government. But as you can see, for most people, there is little chance that you will be filling out any W-2G forms. This is much different from betting horse racing, where there are many opportunities to sign for money.
Even without paying any taxes (because you don’t win betting on sports) you should keep track of your wagers, so you will know how well you are doing. You may find that you do better with baseball than football, or perhaps another sport. Maybe there are certain types of wagers you are good betting. Money line wagers, for example, rather than point spreads. This will help you win more money, and then you can report it to the IRS, as every good American should.
Ken is the author of several books on sports handicapping that are available on Amazon. Among his bestsellers are:
Betting Systems for all Major Sports by Ken Osterman
Betting on Major League Baseball The Underdog Method by Ken Osterman
The Quick and Dirty NFL Football Handicapping Method by Ken Osterman
Handicapping NFL Football The Smart Way by Ken Osterman