Wednesday September 27, 2023

Over/Under: A Look at Sports Betting and Taxes

  • Since the Supreme Court legalized sports betting nationwide, more than $3B in taxes have been taken in.
  • As betting moves to legal U.S. books, bettors should be aware of potential tax liabilities.
Alyssa Keown – Imagn Content Services
Front Office Sports Today

Taylor Swift Takes NFL to New Heights

Taylor Swift and her rumored relationship have brought in a new, more female-heavy audience.
Listen Now
September 27, 2023 | Podcast
Copy Link
Link Copied
Link Copied

The tax filing deadline for most Americans got pushed back to April 18, a product of the 15th falling on a Saturday and Emancipation Day and Patriots’ Day is observed on Monday. 

As legalized sports betting has rolled out to more states since the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) five years ago, Nevada’s status as the only state to place a bet went with it. 

On the plus side: More than 30 states have taken billions of tax dollars off sports betting. 

The downside if you hit a lot of parlays in 2022: With more people ditching offshore sportsbooks that operate illegally in the U.S., Americans are now more likely to claim winnings — and losses — in their filings. 

Individuals are supposed to report any winnings — even for the 50 won for finishing third in your March Madness bracket — no matter the amount as income. And betting companies like DraftKings and FanDuel must report annual winnings that tally more than $600 to the IRS and, typically, your state.

But legendary Southern California accountant Gary Margolis explained why you might not need to worry about the IRS. 

“They know most people stink,” Margolis said. “Most people don’t make a profit.”

Margolis caters to those in the entertainment industry and has a stable of clients who are pro poker players. While most certified public accountants who provide tax services don’t have to deal with gambling-related returns often, Margolis said about 5% of his clients classify their profession as pro gramblers.

Bettors can claim losses, but only against winnings. So, if you made $1,000 betting on NASCAR and lost $500 on table tennis, you could deduct $500 on an itemized return. 

You can’t deduct losses if your losses are more than your winnings.

Federal and state governments have made out no matter if you won or lost at your legal sportsbook. 

More than $3 billion in state and federal taxes have been taken by legalized sports betting since PASPA was overturned in May 2018, according to American Gaming Association Senior VP Casey Clark. The states received $2.68 billion, while the federal government’s take has been $516 million.

“We’ve seen remarkable growth in this space,” Clark said, “Americans have been betting on sports for a really long time. They just didn’t have access to legal markets to do it in. Outside Nevada, those bets were generating $0 in tax [before PASPA was struck down].”

From bookies to offshore books, the AGA estimated $64 billion was wagered illegally in 2022 — down from more than $150 billion before 2018. 

New York ($308,333,132), Pennsylvania ($107,343,524), Illinois ($98,585,341), and New Jersey ($97, 879,592) took in the most in sports gambling tax revenue in 2022, according to the National Conference of State Legislatures. 

Nevada — the only state where legal U.S. wagers could be made for decades — took in $29,167,630. That may sound low, but the total handle (the total best placed) and Nevada tax revenue last year have doubled since 2018.

The Silver State has the advantage of having Las Vegas, where tax revenues come way more from table games, lodging, sports, entertainment — and everything Sin City offers that can be taxed, including weed

So, Nevada’s rate of taxes on revenue from sportsbooks and online betting is lower than most states that joined the game in recent years. 

Nevada’s tax rate on revenues for sports betting ranges from 6.75% for gross wagers at casinos to 14.25% for online sports betting. Rhode Island, by comparison, charges 51% on wagering revenue. 

“In order to create a viable and sustainable legal sports betting market, we needed to have regulations and policy in place that allowed the legal market to effectively compete with the offshore sportsbooks,” Clark said. “In some states you’ve got ridiculously high tax rates that are hindering the legal market. In turn, that’s probably keeping some bettors in the pervasive and predatory illegal market. I think that’s doing a disservice to American consumers who want to bet on sports.”

Copy Link
Link Copied
Link Copied

What to Read

Cincinnati Bengals quarterback Joe Burrow throws a pass in the first quarter of the NFL game between the Cincinnati Bengals and Los Angeles Rams at Paycor Stadium.

NFL Fans Can Now Bet On Games While Streaming

BetVision will allow users to bet while watching NFL games.
Resellers who passed $600 in ticket sales on marketplaces such as StubHub and Ticketmaster now need to report their activity to the IRS.

IRS Lowers Threshold to Tax Ticket Resellers for Sports, Concerts

The IRS lowered its ticket sales threshold from $20,000 to $600.

NHL’s Chris Foster on Amplifying Content Distribution With Automation

Learn how the NHL is using WSC Sports to increase fan engagement.

How Daktronics Helps Elite Athletic Programs Secure Top Talent

How colleges are utilizing Daktronics' displays to elevate recruiting.
podcast thumbnail mobile
Front Office Sports Today

Taylor Swift Takes NFL to New Heights (w/ Andrew Brandt)


Featured Today

Taylor Swift at Chiefs vs. Bears game.

Taylor Swift NFL Hype Likely To Continue Another Week

Swift could drive blockbuster TV ratings for NBC's "Sunday Night Football."
September 27, 2023

Lillard And Giannis Pairing Could Be Big For The NBA, Too

Bucks to be featured on national TV 19 times this season
September 27, 2023

Magic Johnson Open To Knicks Minority Ownership Stake

Basketball Hall of Famer only interested in specific NBA franchise
Golden State Warriors majority owner Joe Lacob walks alone the baseline during the third quarter against the Los Angeles Clippers at Chase Center.
September 27, 2023

Warriors Owner Reportedly Adding A Bay Area WNBA Franchise

An official announcement could come as soon as early October.


Powered By

Careers in Sports

Looking for a new job? Check out these featured listings and search for openings all over the world.
Chicago Cubs
New York
Tri Star Sports and Entertainment Group, Inc.
USA - Multiple Locations
Minnesota Vikings wide receiver Justin Jefferson fumbles the ball out of bounds in the end zone while being tackled by Philadelphia Eagles safety Terrell Edmunds during the second quarter at Lincoln Financial Field.

NFL Survivor Pools Remain Relevant in the Legal Sports Betting Era

Survivor’s appeal comes from its uncomplicated premise.
September 16, 2023

The Newcomers That Want To Upend Sports Betting’s Duopoly

Fanatics Sportsbook, ESPN Bet eye major market impact during NFL season
Colorado Buffaloes running back Dylan Edwards reaches for the ball past Nebraska Cornhuskers cornerback Deshon Singleton in the third quarter at Folsom Field.
September 14, 2023

Sportsbooks Are Content With Bettors ‘Embracing’ Colorado Hype

Heading into Week 3 and longer-term, the books aren’t sweating it.
Colorado Buffaloes head coach Deion Sanders on the sidelines during the game against the TCU Horned Frogs at Amon G. Carter Stadium.
September 8, 2023

Deion Sanders’ Colorado Is the ‘Worst-Case Scenario’ for Sportsbooks

The Buffaloes are darlings for the sports betting public.
September 7, 2023

NFL Season Start Heightens Sportsbook Battle For Customers

Sportsbooks get aggressive with promotions to attract new bettors
Iowa State quarterback Hunter Dekkers throws the ball during the Cy-Hawk Series football game against Iowa.
September 7, 2023

Five Plead Guilty in State Betting Probe Ahead of Iowa-Iowa State Game

The current and former players pleaded guilty to lesser charges.
College students can buy Sunday Ticket for $109, a decrease from DirectTV’s $120 student package from last season.
September 6, 2023

Expansive NFL Betting Presents Opportunity, Concerns For League

Latest data shows massive surge in projected NFL bettors
An overall view as Kansas City Chiefs quarterback Patrick Mahomes throws a pass against the Las Vegas Raiders in the first half at Allegiant Stadium.
September 6, 2023

Record 73.5 Million Americans Projected to Bet On 2023 NFL Season

About 28% of American adults plan to bet on the NFL.