Gambling taxes explained: Chip at a kitchen table late at night with a stack of paperwork

Gambling Taxes for US Players: Casino, Sweeps and Crypto

🕑 20 min read

Last updated: September 2026

Last verified 3 weeks ago (16 September 2026)

🎥 Watch: Chip on the year a level result got taxed

Gambling taxes for US players changed this year, and not in your favor. Winnings have always been taxable. From tax year 2026 you can only deduct 90 percent of your losses, so a break-even year can now leave you owing money.

Let me say that again, because when I first read it I assumed I had it wrong. You win fifty grand. You lose fifty grand. You are exactly where you started, down to the dollar. And the Internal Revenue Service now says you have five thousand dollars of income.

That is not a loophole or somebody’s hot take. It’s the wording of the law. Section 165(d) of the tax code says the deduction for wagering losses “shall be equal to 90 percent of the amount of such losses,” and it still can’t exceed your winnings. The change came in with Public Law 119-21 and it applies to tax years beginning after 31 December 2025.

Here’s what this page does. The forms, what triggers each one, the arithmetic on the new cap, and the two places nobody else explains: sweepstakes sites and crypto casinos. Neither of those sends you the form you’re expecting.

The 90 percent cap, and the money you never had

Phantom income is the polite name for being taxed on a gain you didn’t keep. The 90 percent cap creates it out of nothing more than a busy year at the tables.

That gold sliver is ten percent of your losses, and from 2026 it is taxable income.

The old rule, which governs every return being filed for tax year 2025, was clean enough: losses came off your winnings pound for pound, up to the amount you won, and a break-even year was a nothing year. The statute said losses “shall be allowed only to the extent of the gains from such transactions” and that was the whole of it.

The new rule keeps that ceiling and adds a haircut underneath it. Ten percent of your losses simply stop existing for tax purposes. The more you churn, the bigger the gap, and it has nothing to do with whether you actually made a dime.

A break-even year	Won	Lost	Losses you can deduct	Taxable
Tax year 2025, old rule	$50,000	$50,000	$50,000	$0
Tax year 2026, new rule	$50,000	$50,000	$45,000	$5,000

At a 24 percent marginal rate that’s $1,200 of federal tax on a year where you finished level. Scale it down and it still bites: ten grand through and ten grand back gives you $1,000 of phantom income and about $240 owed.

Who does this actually hurt?

High-volume players, hardest. A recreational player who puts two hundred dollars through a slot on a Friday will never notice, because the numbers are too small and most people take the standard deduction anyway. Somebody grinding sports bets or tables through six figures a year will notice immediately.

Which rules apply to which return

Two sets of numbers are in play right now, and using last year’s figures on this year’s return is the easiest mistake on this whole page to make.

Before you use any number on this page, check which of these two returns you are filling in.

The return you filed earlier this year covered tax year 2025. Old thresholds, old loss rule, nothing on this page about 90 percent applies to it. The return you’ll file in early 2027 covers tax year 2026, and that one carries both the new reporting thresholds and the new cap.

If you read a tax guide that lists a threshold without saying which year it belongs to, you are reading something written before the change and never updated. Two of the three biggest guides on this subject still do exactly that.

What a real-money casino sends you

Form W-2G is the one most players have seen. The casino files a copy with the IRS, so the number is known before your envelope arrives.

The headline change for 2026 is that the old per-game dollar figures are gone. The IRS instructions no longer print “$1,200 for slots” and the rest of that familiar list. They now say to check “the applicable reporting threshold for each type of gambling winnings,” and they set a floor: the minimum threshold for payments made in calendar year 2026 is $2,000, adjusted for inflation every year after that.

Slots, bingo and keno. Reportable at the applicable threshold, which for 2026 starts at $2,000. No tax is withheld at the window on these.
Poker tournaments. Measured on net winnings, so your buy-in comes off first. Results from other tournaments at the same room during the year don’t get pooled in.
Sports wagering. New section in the instructions this year. A W-2G goes out when the win meets the threshold and is at least 300 times the wager.
Horse and dog racing, jai alai. Same 300-to-1 test as sports.
Table games. Blackjack, craps, roulette and baccarat don’t generate a W-2G at all. The winnings are still fully taxable, which catches people every year.
Prizes that aren’t cash. A car, a trip, a watch. The fair market value counts as winnings, and the IRS instructions name a car in a sweepstakes specifically.

No W-2G means no tax, right?

No, and this is the single most expensive misunderstanding in gambling. The IRS is blunt about it: you must report all gambling winnings, “including winnings that aren’t reported on a Form W-2G.” The form is a reporting trigger for the casino. It was never a threshold for you.

What a sweepstakes site sends you, and it isn’t a W-2G

A sweepstakes redemption is not a wager, so it produces no W-2G. It produces a Form 1099-MISC, and almost nothing written about gambling tax mentions that form at all.

Three different envelopes, or none at all. The right-hand column never changes.

The logic follows the same trick that makes the whole sweepstakes model legal. You never wagered, because Sweeps Coins arrive free alongside a Gold Coin purchase or through the postal entry route. No wager means it isn’t gambling, and if it isn’t gambling then the gambling form doesn’t fit. The IRS instructions handle it in one sentence: include “amounts paid to a winner of a sweepstakes not involving a wager,” and “if a wager is made, report the winnings on Form W-2G.”

So your redemptions land in box 3 of a 1099-MISC, the box for prizes and awards. That box had a $600 floor for decades. For tax years beginning after 2025 it moved to $2,000, the same figure as the W-2G minimum.

Does that mean small redemptions are tax free?

It does not. The threshold decides whether the sweepstakes site has to file a form about you. Your obligation to report the income doesn’t move at all. Redeem $1,400 across a year, get no paperwork, and that $1,400 is still income you’re supposed to declare.

There’s a nastier wrinkle here that nobody warns sweeps players about. Because a sweepstakes prize is not a wagering transaction, the gambling-loss deduction is built for a different animal. Gold Coin purchases are not “losses from wagering transactions” in the way a busted blackjack hand is, and if you cannot deduct them, the 90 percent question never even arises. You may be taxed on the full redemption with nothing to set against it.

I’m not going to pretend the position is settled, because it isn’t, and anyone telling you flatly either way is guessing. What I will say is that a sweeps player who redeems steadily through a year should be talking to somebody who does this for a living, not reading a blog. Our Gold Coins and Sweeps Coins guide explains why the two currencies work the way they do.

Crypto casinos give you two tax events, not one

Playing in crypto stacks a second layer on top of the gambling layer, because the coin itself is property and moving it is a disposal.

Win a thousand dollars of Bitcoin at an offshore site and you have gambling income. You may also have a capital gain or loss on the coin you deposited, depending on what it was worth when you bought it against what it was worth when you moved it. Two separate calculations, two separate places on the return, one evening of play.

Offshore crypto sites are not licensed in any US state, so they file nothing with anyone. No W-2G, no 1099, no year-end summary worth the name. The reporting obligation is entirely yours and there is no paperwork arriving to remind you of it. Our crypto gambling taxes guide goes through the capital-gains half properly.

What gets taken before you see it

Two kinds of withholding exist and both sit at 24 percent, which is why people confuse them. They fire on completely different triggers.

Regular gambling withholding. Twenty-four percent, taken when your winnings minus the wager come to more than $5,000 on sweepstakes, wagering pools, lotteries, parimutuel racing at 300 to 1, and sports wagering at 300 to 1. It’s figured on the whole gross amount, not just the part above $5,000.
Backup withholding. Also 24 percent, and this one is about paperwork rather than size. If you don’t give the payer a correct taxpayer ID number, they hold it back. You get it returned at filing, roughly a year later.
Noncash prizes where the payer covers the tax. The rate becomes 31.58 percent of the value minus the wager. You’ll see this on cars and holidays rather than chips.

And here is the bit worth committing to memory: regular gambling withholding does not apply to bingo, keno or slot machines. Hit a $40,000 jackpot on a slot and nothing is deducted at the window. The whole amount is paid to you, the form is filed, and the tax bill turns up later when you have already spent some of it.

Where it all goes on the return

Winnings and losses sit in two different places, and they are not netted against each other before they get there.

What	Where	The catch
Gambling winnings	Schedule 1, line 8b	Gross winnings, before any losses. Fantasy sports counts as gambling winnings too
Gambling losses	Schedule A, as an other itemized deduction	Only if you itemize, only up to your winnings, and from tax year 2026 only 90 percent of them
Crypto gains or losses	Form 8949 and Schedule D	A separate calculation on the coin itself

That split is why the standard deduction matters so much here. If you take it, as most people do, you get no deduction for gambling losses at all, and every dollar of winnings is taxed with nothing to offset it. Itemizing only makes sense if your total itemized deductions beat the standard one, and for most recreational players they don’t come close.

What records do I actually need?

The IRS is explicit that the loss deduction requires you to have “kept a record of your winnings and losses.” Dates, the place, what you played, what went in and what came out. Casino account statements and app histories do most of the work now, so download them before an operator closes your account or leaves your state.

That last bit isn’t hypothetical. Sites pull out of states, accounts get closed, and when they go your history goes with them. I’d pull a statement at the end of every quarter rather than hunting for twelve months of it in April, and I’d keep the sweeps and crypto ones too, because those are the accounts where nobody else is keeping a record on your behalf.

Why “they’ll never know” stopped being true

A W-2G is an information return, which means the copy you get in the post is the second copy. The first one went to the IRS.

That is the part people miss when they decide a win is too small to bother with. Nobody is reading your return looking for gambling. A computer is matching the forms filed under your taxpayer ID against the income you declared, and a W-2G that appears on one side and not the other is exactly the shape of thing it is built to notice.

The same logic runs through the 1099-MISC from a sweepstakes site. Over the box 3 threshold, that form is filed whether or not you ever look at your own copy.

Where it goes quiet is the offshore side. A crypto casino with no US license files nothing, so there is no matching to do and no letter to trigger. That is not the same as owing nothing, and the absence of paperwork is the reason your own records matter more there than anywhere else.

If you do this for a living

Professional gamblers file on Schedule C like any other business, and the 90 percent cap reaches further into their return than most people have noticed.

Read the second paragraph of the new law and you find that “losses from wagering transactions” is defined to include “any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” That is not just the money that went across the felt. It sweeps in the costs of doing the job, so the travel, the buy-ins, the data subscriptions and the hotel nights all get pulled inside the same 90 percent haircut rather than sitting outside it as ordinary business expenses.

The IRS guidance for the 2025 return still describes the older arrangement, where a professional’s losses and expenses were limited to the amount of winnings and nothing more. That window was written to run through 2025 and it has now closed.

If gambling is genuinely your income rather than your hobby, this is the paragraph to take to an accountant. It changes the arithmetic on a whole career, not just on one good weekend.

A year in the life, with the numbers

Most people play in more than one place now, and the forms arrive from different directions and land in different boxes. Here is an ordinary year for an ordinary player.

Where	What happened	What arrives	Where it goes
Licensed online casino	$2,400 slot win in March, $3,100 lost across the year	W-2G for the $2,400, over the $2,000 threshold	Winnings on Schedule 1. Losses only if itemizing
Sweepstakes site	$1,450 redeemed in Sweeps Coins	Nothing, it sits under the $2,000 box 3 floor	Still reportable income
Offshore crypto casino	$900 up on the year, coin moved in value too	Nothing at all, ever	Schedule 1, plus Form 8949 for the coin

Add the winnings side up and you get $4,750 of reportable income. One piece of paper arrived. That is the gap this page exists to close, because the two places that sent nothing are not the two places that owe nothing.

Now take the standard deduction, as roughly nine in ten filers do, and the $3,100 of casino losses does nothing for you at all. The full $4,750 is taxed. Whether the 90 percent cap even enters the picture depends on itemizing, and for a player at this level it almost never will.

What this page is not

This is not tax advice and I’m not your accountant. It’s the vocabulary and the arithmetic, so the forms make sense when they land and you know what to ask.

State tax is its own separate mess and I’ve deliberately stayed out of it. Some states tax gambling winnings and allow no loss deduction whatsoever, which can produce a state bill on a losing year even before the federal cap gets involved. That one genuinely does need somebody who knows your state.

If you had a big year, or a high-volume year, or you’re playing in crypto, pay an accountant. A couple of hundred dollars against a five-figure swing is the best value bet on this entire site.

🎲 Chip’s Vegas

In the seventies the tax question settled itself, because most of it was cash and nobody was writing anything down. A guy had a good night, the money went in his pocket, and that was the end of the transaction. The W-2G showed up in 1977 with a twelve-hundred-dollar line on it and the old-timers acted like the roof had come off.

Almost fifty years that number sat there. Never moved once. Then it goes to two grand and in the same breath they quietly take ten percent of everybody’s losses away, and the second one is the part that actually costs you.

Here’s my honest read. I’ve watched a lot of people lose money in this town and not one of them ever lost it to a tax form. But I’ve watched plenty get a nasty letter in February because they thought no paperwork meant no problem. Download your statements. That’s the whole lesson.

Frequently asked questions

Do I pay tax on gambling winnings in the US?

Yes, on all of them. Gambling winnings are fully taxable and go on Schedule 1 of your Form 1040, whether or not the casino issued you a form. That includes cash, the fair market value of prizes, and fantasy sports winnings.

Can I still deduct my gambling losses?

Only 90 percent of them from tax year 2026, only up to the amount you won, and only if you itemize on Schedule A. The 90 percent cap comes from Section 165(d) of the tax code as amended by Public Law 119-21, and it applies to tax years beginning after 31 December 2025.

At what amount does a casino report a win to the IRS?

For payments made in calendar year 2026, the minimum reporting threshold is $2,000, and it’s adjusted for inflation each year after. The old per-game dollar figures have been removed from the IRS instructions, which now point to the applicable threshold for each type of winnings.

Do I owe tax on sweepstakes casino redemptions?

Yes. A sweepstakes prize is income, and because no wager was placed it goes on a 1099-MISC rather than a W-2G. Box 3 of that form starts at $2,000 for tax years beginning after 2025, but the reporting threshold only decides whether the site files paperwork, not whether you owe.

Is a break-even year really taxable now?

It can be. Win $50,000 and lose $50,000 in tax year 2026 and you may deduct $45,000, leaving $5,000 of taxable income on a year where you finished level. At a 24 percent rate that is roughly $1,200 of federal tax on money you never kept.

How much tax is withheld from a big win?

Twenty-four percent, when winnings minus the wager exceed $5,000 on sweepstakes, pools, lotteries, parimutuel racing and sports wagering at 300 to 1. It does not apply to bingo, keno or slots, so a large slot jackpot is paid to you in full and taxed later.

What if the casino never sent me a form?

You still report the income. The IRS says to report all gambling winnings including those not reported on a Form W-2G. Offshore and crypto sites file nothing at all, which makes your own records the only thing standing between you and a guess.

Do I owe tax on crypto casino winnings?

Yes, and in most cases twice over. The winnings are gambling income, and the cryptocurrency you deposited or withdrew is property, so any movement in its value is a separate capital gain or loss reported on Form 8949 and Schedule D.

Crypto gambling taxes: the capital-gains layer in detail
Gold Coins vs Sweeps Coins: why a redemption is not a wager
Casino glossary: every term you’ll meet, in plain English
The AMOE guide: the free entry route that keeps sweeps legal
Casino payment methods: getting the money out in the first place

Responsible play. Gambling is real-money risk, for adults only, 18 and over, or 21 and over where local law requires. This page is general information about how US gambling taxes work. It is not tax, legal or financial advice, and it is not a substitute for a qualified accountant who knows your situation and your state. If it stops being fun or you are chasing losses, step away. In the US call or text the National Problem Gambling Helpline at 1-800-MY-RESET. In the UK, GamCare is on 0808 8020 133. In Australia, Gambling Help Online is on 1800 858 858.

The short version

All winnings are taxable, form or no form. Losses only count if you itemize, only up to what you won, and from tax year 2026 only 90 percent of them. Sweeps redemptions arrive on a 1099-MISC. Crypto gives you two calculations instead of one.

Download your statements while you still can, and if the numbers got big, pay somebody who does this properly.

What are the odds?