Betting on Super Bowl 59? Here’s What You Need to Know About Taxes

Super Bowl Sunday is a big day for football fans, but it’s also one of the biggest days for betting. With legal sports gambling becoming more widespread, the tax implications of those winnings are catching more people off guard. Whether you’re placing a bet on your favorite team or just hoping for a lucky win, one thing is certain—the IRS is watching.

The reality? All gambling winnings are taxable, and while you can deduct losses, it’s not as simple as subtracting what you lost from what you won. Many casual bettors make this mistake and end up owing more than expected.

A Growing Industry Means More Tax Scrutiny

Instagram | indyrecorder | Legal sports betting is exploding, with a record $1.39 billion predicted for Super Bowl 59.

With more states legalizing sports betting, the industry has exploded. The American Gaming Association predicts that a record-breaking $1.39 billion will be legally wagered on Super Bowl 59 alone.

Currently, 38 states and Washington, D.C., allow legal sports betting, and that number is likely to keep rising. Since a 2018 Supreme Court ruling cleared the way for states to regulate gambling, tax agencies have been paying closer attention.

According to tax expert George Smith, “We’re seeing an increase in IRS notices about unreported gambling winnings. The IRS has figured out it’s a winner in this game, too.” In other words, if you hit a jackpot—or even a modest win—there’s a good chance the IRS knows about it.

What Casual Bettors Need to Know About Taxes

You Can Deduct Losses—But Only If You Itemize

If you’re hoping to write off a bad betting streak, there’s a catch. Gambling losses can only be deducted if you itemize your deductions, and most people don’t.

1. If you take the standard deduction (which most taxpayers do), you cannot deduct gambling losses.
2. If you itemize deductions, you can deduct losses, but only up to the amount of your winnings.

For example, if you won $1,000 but lost $5,000, you can only claim $1,000 in losses—not the full $5,000. That means you’re still on the hook for taxes on your winnings.

The Standard Deduction is High—Most People Don’t Itemize

How Gambling Winnings Are Reported

1. IRS Reporting Requirements for Gambling Wins

If you win big, expect to get a Form W-2G from the casino, sportsbook, or lottery. This form reports your winnings to both you and the IRS. But even if you don’t receive one, you’re still required to report all gambling income on your tax return.

The IRS requires a W-2G for:

1. $1,200+ in slot machine or bingo winnings
2. $1,500+ from keno
3. $5,000+ from poker tournaments
4. $600+ in horse racing or other gambling winnings (if the payout is at least 300 times the bet)

For sports betting, platforms like FanDuel issue a W-2G if you win $600 or more, as long as the winnings are at least 300 times your wager.

2. Casinos Report Winnings—Even iI You Forget

Casinos and sportsbooks automatically report winnings to the IRS, which is why some bettors are surprised when they receive tax notices for gambling income they forgot about.

Smith advises, “Many people lose track of their gambling wins and losses, and that often leads to tax problems. Even my most organized clients sometimes get an IRS notice about unreported winnings.”

Keeping Track of Your Gambling Activity

To accurately report gambling winnings and losses, keep detailed records. This includes:

1. Wagering receipts or tickets
2. Win/loss statements from casinos or sportsbooks
3. Bank statements showing deposits and withdrawals

If you plan to itemize losses, documentation is essential. Without proof, the IRS won’t accept your claim.

State Taxes on Gambling Winnings

Freepik | Gambling winnings face both federal and state taxes, but state rules differ.

Gambling winnings are not just subject to federal taxes—they can also be taxed at the state level. However, the rules vary depending on where you live.

In Michigan, for example, lottery prizes under $600 are not subject to tax withholding, but any winnings exceeding $5,000 are automatically taxed at 24% for federal taxes and 4.25% for state taxes.

Other states have different policies, with some imposing their own tax rates on gambling income and a few states not taxing gambling winnings at all.

Report Accurately to Avoid IRS Issues

Gambling can be exciting, but when tax season rolls around, many bettors are caught off guard. The IRS isn’t just watching big wins—smaller amounts are being tracked, too.

To avoid tax headaches:

1. Report all gambling winnings, even if you don’t receive a W-2G.
2. Keep records of losses if you plan to itemize deductions.
3. Understand that most people won’t be able to deduct losses unless they itemize.
4. Check state tax laws, as gambling winnings may be taxed differently depending on where you live.

If you’re unsure about your tax situation, consulting a tax professional can help ensure you’re following the rules—and avoiding any unexpected IRS letters. Super Bowl 59 will bring plenty of action on and off the field—but don’t let your tax bill be the biggest surprise of the season.