Need to Know Tax › Questions everyone gets asked
Gambling
Gambling and sports betting: winnings, losses, the W-2G
For anyone with a sportsbook app on their phone, a casino weekend in Black Hawk, or a lottery ticket that finally hit. Every dollar of winnings is taxable, losses help only if you itemize, and from 2026 only 90% of them count, so a break-even year is a taxable year.
Every dollar of gambling winnings is taxable. That includes casinos, sportsbook apps, lotteries, poker, raffles, and the office pool, whether or not anyone sends you a form. The form, when it comes, is a W-2G, and for 2026 the threshold for one rose to $2,000 for most games. The IRS gets a copy of every W-2G and matches them against returns the way it matches W-2s. A missing one draws a letter. The absence of a W-2G changes nothing: a $500 win on a parlay with no form is $500 of income. The apps make this easy to forget, because the money never leaves the phone, and easy to prove, because every bet is logged.
| Game | 2025 | 2026 |
|---|---|---|
| Slot machines, bingo | $1,200 or more | $2,000 or more |
| Keno | $1,500 or more, net of the wager | $2,000 or more |
| Poker tournaments | More than $5,000, net of the buy-in | More than $5,000 |
| Sports betting, horse racing, lottery, table games and other wagers | $600 or more and at least 300 times the wager | $2,000 or more and at least 300 times the wager |
Federal tax of 24% is withheld from most winnings over $5,000 (for wagers, when the payout is also at least 300 times the bet), and from any reportable win if you do not give your Social Security number. Withholding is a down payment; the real tax depends on your bracket. The thresholds rise with inflation after 2026.
Losses, and the new 90% rule
Losses are deductible, with two conditions that catch most people. First, they are deductible only if you itemize. Someone who takes the standard deduction gets no benefit from losses at all; the winnings go in as income and nothing comes out. Second, losses count only up to the amount of winnings. A losing year is not a deduction against wages or a pension.
Starting in 2026 there is a third condition. Only 90% of losses count. Win $20,000 and lose $20,000, and you owe tax on $2,000, because only $18,000 of the losses are deductible. A bill to restore the full deduction has cleared a House committee, but as this went to press the 90% rule was the law for 2026. For a regular player who breaks even over a year, that is a tax on money never kept.
Worked example: a break-even year, three filers
Each won $20,000 across the year and lost $20,000. All are in the 22% bracket.
| Itemizer | Standard-deduction filer | Retiree on the standard deduction | |
|---|---|---|---|
| Winnings reported as income | $20,000 | $20,000 | $20,000 |
| Losses allowed (90%, itemizers only) | $18,000 | $0 | $0 |
| Taxable from gambling | $2,000 | $20,000 | $20,000 |
| Federal tax at 22% | $440 | $4,400 | $4,400 |
| Colorado at 4.40% | $88 | $880 | $880 |
| Side effects of $20,000 more AGI | Possibly | Possibly | Up to $17,000 more Social Security taxed (about $2,000 more tax), and a Medicare tier crossed for 2028 (about $2,000 for a couple) |
| Cost of a year that ended even | about $530 | about $5,300 | roughly $9,000 |
Rounded. The retiree’s losses are real but invisible to AGI, and AGI is what the Social Security formula and Medicare use. A big gambling year is sometimes the thing that makes itemizing pay: $18,000 of losses on top of $15,000 of other deductions clears the $32,200 standard deduction, which is why the return is run both ways.
The quieter cost: your AGI
Winnings go into adjusted gross income in full. Losses, for those who can use them, come out further down the return, as an itemized deduction. The AGI never sees the losses, and AGI is the number that decides how much of your Social Security is taxable, whether you owe Medicare’s income-related premium surcharge two years later, whether the Marketplace credit survives, and whether a dozen credits and deductions phase out. A retiree who wins and loses $30,000 at the slots over a year, and ends the year even, can find more of the Social Security taxed and a higher Part B premium in two years, with nothing to show for it.
Records
The IRS expects a log: dates, places, games, amounts won and lost. Casinos with a player’s card and every betting app will produce a win/loss statement for the year on request. Download it in January, before the account is closed or the app changes hands. The statement is not a substitute for the W-2Gs, which are reported separately, but it is what supports the losses. Without it, the winnings stand and the losses do not. Session records help too: the IRS allows netting within a single session at a casino (verify), so a day that started with $2,000 and ended with $1,500 is a $500 loss, not $4,000 of wins and $4,500 of losses.
Behind the scenes
The W-2Gs a client brings in are checked against the IRS wage-and-income transcript, because a casino’s forms often outnumber the ones that made it home. Then the win/loss statement gets read carefully: it nets wins against losses, while the return needs winnings in full on one line and losses, limited to winnings and then to 90%, on another. A preparer rebuilds both figures from the statement rather than copying the net, and runs the return both ways, itemizing and not, since a big gambling year is sometimes the thing that makes itemizing pay. The last check is withholding: a $6,000 jackpot had $1,440 withheld at 24%, which may be more or less than the real tax on it.
The Colorado side
Colorado starts from federal taxable income and taxes it at a flat 4.40%, so the same winnings, and the same losses if you itemize, flow through to the state return; a non-itemizer pays Colorado tax on the full winnings. Colorado casinos and sportsbooks withhold Colorado tax on large payouts (verify rate), shown on the W-2G’s state boxes. Winnings from another state’s casino or lottery are taxed by Colorado as a resident, with a credit for any tax that state withheld and kept.
What to bring your preparer
- Every Form W-2G, including those from apps, which arrive by email or in the app rather than by mail
- Annual win/loss statements from every app and every casino player’s card account
- A gambling log, if you kept one: dates, places, games, amounts
- Lottery and raffle tickets that won, with the payout statements
- Withholding shown on the W-2Gs, federal and Colorado
- Your other itemized deductions, so the two routes can be compared
Questions people ask
I won $1,500 on a slot and got no form. Do I report it?
Yes. The W-2G thresholds only decide whether the casino or app sends a form. All gambling winnings are taxable.
I lost more than I won. Can I deduct the difference?
No. Losses are capped at winnings, and from 2026 at 90% of them, and only if you itemize. A net losing year produces no deduction against other income.
My sportsbook app shows a net loss for the year. Can I just report zero?
No. Winnings go on the return in full and losses go on Schedule A, if you itemize. The app’s net figure is the starting point for rebuilding both, not a number for the return.
Does the office pool count?
Yes, whether you won $50 or $5,000. Nobody issues a form, and nobody reports it; it is taxable all the same.
Will the 90% rule be repealed?
A bill to restore the full deduction for 2026 advanced in committee in September. Until it is signed, 90% is the law for 2026. The updates page will carry any change.
Download the win/loss statement in January
Every app and every casino with a player’s card will produce one, and it is the only thing that supports the losses. Without it, the winnings stand on the return and the losses do not.