Online Sports Betting Taxes: DraftKings, Fantasy Football, and More

Do you need to pay taxes on your sports betting income?

Yes. Just like any other form of income, gambling winnings are taxable. This applies to all types of gambling, whether you placed your bet in person, on an app, or on your computer.

One bright spot: You do have to win money in order to owe taxes on your gambling income. So if your year wasn’t exactly lucky (that is, you lost money gambling in 2023), you won’t have to add insult to injury.

What taxes do you need to pay on your sports betting income?

There are a few taxes you might need to pay on your sports betting income. Chances are, you’ll only need to deal with one — income tax — so we’ll start there.

Income tax

All gambling winnings are subject to federal income tax, and will be taxed at the same rate as your other income. You can figure out your income tax rate on the IRS website.) 

Once you add your gambling winnings to your other income, you can estimate how much you’ll owe (or get as a refund!) using Keeper’s income tax calculator.

Depending on the state you live in, you might also have to pay state income tax. (Also remember that sports betting is not legal in every state — or it might only be available in person!) 

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Self-employment tax

Most people who use online sportsbooks aren’t professional gamblers. They’re “casual bettors.” However, if you gamble as a profession, the IRS will see your gambling winnings as self-employment income. That means you’ll need to pay self-employment tax on it. 

Self-employment tax is also known as FICA (Federal Insurance Contributions Act) tax, and it helps fund Social Security and Medicare. All workers are actually required to pay FICA tax, but self-employed workers have to pay double the amount that W-2 workers pay. (Sorry.) 

Traditional employees split the 15.3% tax rate with their employer, which means they only pay 7.65%. But self-employed workers are both the employer and the employee, so they’re on the hook for the full 15.3%.

How taxes are different for professional sports gamblers

If you’re a professional gambler, you’ll need to think about your taxes a bit differently than if you just gamble for as a hobby.

How do you know if you’re a professional gambler?

In general if you seek to make a profit from gambling (even if you don’t quite yet) and put regular effort into generating this income stream, you might count as a professional self-employed gambler. Otherwise, your gambling just counts as a hobby.

If you’re still not sure, check out this guide to the IRS’s hobby vs. business guidelines.

How to lower your sports betting taxes with write-offs

If you are a pro bettor, you can deduct some of the expenses that helped you do your job, which means your taxable income will decrease.

For example, let’s say you made $10,000 on DraftKings last year, but you lost $3,000 — plus, you logged onto your home Wi-Fi to use the platform. The $3,000 loss and the business-use percentage of your internet bill — let’s say that comes out to $200 — are deducted from your gross income. In the end, you’d only be taxed on $6,800.

Keep in mind that if you’re a self-employed worker, you can claim business write-offs even if you take the standard deduction!

Here are a few examples of business write-offs you might be able to take as a professional bettor:

• 🌐 Wi-Fi bill: Use your home internet connection for sports betting? Calculate your business-use percentage, and it’s a write-off
• 📱 Cell phone: If you use an app to place your bets, you can write off the business-use percentage of your cell phone, too (and your phone bill)
• 🏠 Home office: Have a dedicated space for work in your home? You might be eligible for the home office deduction — check out Keeper’s home office deduction quiz to find out if you are
• 💰 App fees: If you’d paid any platform fees or made in-app purchases in order to place bets, those are deductible
• 📺 Streaming services: If you subscribe to certain streaming services in order to learn about your favorite teams and make informed betting decisions, you can write off those subscriptions, too. (If you use the same subscriptions for personal entertainment, just deduct your business-use percentage!)

How to calculate business-use percentage

The business-use percentage of an expense is basically the proportion of the time you used that item (or service) for business purposes. 

For example, let’s say you pay $60 per month for home internet, and use that Wi-Fi connection for work purposes 15% of the time. You’d get to write off 15% of $60 — or $9 — per month.

Keeper can help you figure out which of your expenses are deductible, including calculating the business-use percentage of each one. 

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Do professional gamblers need to pay quarterly taxes?

Maybe! Self-employed workers who expect to owe $1,000 or more in taxes for the year are on the hook for quarterly taxes — which means they’ll pay taxes four times a year, instead of just once in April. 

You can use Keeper's estimated quarterly tax calculator to find out if that’s you. If it is, plan to make payments on the following dates:

• April 15
• June 15
• September 15
• January 15

Quarterly taxes can be a pain, but they’ll also help you stay organized. Plus, you won’t be hit with a big, scary yearly bill on April 15.

Can you deduct your sports betting losses on your taxes?

Yes, but, you can only deduct your losses under two circumstances:

1. You itemize your deductions instead of taking the standard deduction, or
2. You’re a professional sports bettor

Let’s say you’re a hobbyist who did well on DraftKings last year, winning a total of $5,000. However, you also lost $1,000. You’ll pay taxes on the $5,000 unless you deduct your $1,000 loss — if you do, only you’ll pay taxes on $4,000.

Keep in mind that you can’t write off losses that exceed the amount you won, even if you’re a professional gambler.

If you itemize instead of taking the standard deduction

Most taxpayers take the standard deduction, which is a standardized amount you can deduct in order to lower your taxable income. (For tax year 2023, that amount is $13,850 for people who are single or married filing separately, $27,700 for people who are married filing jointly, and $20,800 for heads of household.) 

If you choose not to take the standard deduction, you’ll itemize your personal deductions instead. That means you’ll subtract certain qualifying expenses, like donations and student loan interest, from your taxable income manually. 

Or you can use Keeper to streamline your filing experience, with tax experts at the ready to answer your questions. It’ll take care of deductions for you!

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If you’re a professional sports bettor

If you’re a pro sports bettor, you can subtract your losses from your gambling income, which means you’ll only get taxed on your profit. However, unlike most other self-employed workers, you can’t deduct more than you make in a given year (that is, you can’t claim a net loss). 

Pro gamblers used to be able to do this, but the Tax Cuts and Jobs Act of 2017 ended the practice.

Can you deduct the money you bet originally?

Yes, but this is also only possible if you itemize your deductions or if you’re a professional bettor.

What forms will you receive for your sports betting taxes?

There are two forms you might receive from a sports betting platform: 

• Form W-2G: For your gambling income
• Form 1099: For prizes and promotions from a gambling platform

Both are intended to document income you received on the platform. Whichever form you get, the IRS also receives a copy — which means it knows about your gambling income and will expect you to pay taxes on it.

What is Form W-2G?

Form W-2G is used to report gambling winnings. In general, you’ll receive this form from an online sportsbook if:

• You won over $600, and
• Your return was over 300 times the amount you wagered

You’ll receive a separate Form W-2G for each transaction that meets these requirements. It’s possible, then, that you might receive multiple W-2Gs from the same platform! The platform will also send a copy to the IRS.

When will you receive your W-2G?

W-2G forms are due to recipients on January 31. You should expect to receive yours by mid-February.

Why there might be federal tax withholdings on your W-2G

It’s possible that your W-2G might state that federal income taxes have already been withheld from your winnings. If so, that’s because your transactions met both of the following criteria:

• You won over $5,000, and
• Your return was over 300 times the amount you wagered

In these cases, the gambling platform is required to withhold taxes for you, and you won’t have to pay anything extra when you file.

What is Form 1099?

If you received other prizes or promotional payouts totaling $600 or more from a platform like DraftKings or FanDuel, you might also receive a 1099 form from the sportsbook itself. (They’ll also send the IRS a copy.) 

What kind of 1099 will you receive?

You’ll likely get a 1099-MISC, which reports miscellaneous income.

However, if you received your payouts from third-party payment platforms like Stripe or PayPal, you may receive a 1099-K — which reports payments from credit and debit cards as well as payment apps.

The form you receive will depend on your platform’s payout practices, but no matter what, it will detail all the income you made on that platform for the year. You’ll use that information to fill out your own tax return, which you’ll then file to the IRS.

When will you receive your 1099?

1099 forms are also due to recipients on January 31. You should receive yours by mid-Februrary.

What if you don’t receive a tax form?

If you don’t receive a W-2 G or 1099 by mid-February, don’t panic — there’s a good chance it’s just a bit late. And if you don’t receive one at all? That either means your income didn’t qualify for one or that there was a snafu on the platform’s side. 

Either way, you’ll be fine: You can use other sources to figure out the information you need to file your taxes — your gambling income.

How to figure out your gambling income with a form

Most apps have a place where you can check your “stats.” Here are a few examples.

• On FanDuel, you can refer to your “Player Activity Statement,” which houses all your bets, wins, losses, and payouts for the year
• On DraftKings, you can view your winnings in your Transaction History. For a complete list of all your bets, head to your “My Bets” page
• On PointsBet, you can find your stats by clicking the dropdown menu on the top right of your home screen. From there, you can sort your bets by win/loss or type

While this isn’t an official tax document, it’s still a helpful source of information if you don’t have a 1099 or W-2G to fall back on.

What about fantasy sports winnings?

Did you absolutely slay at fantasy football this year? If you meet the income threshold, you’ll receive a 1099 reporting that income, not a W-2G. 

This is because fantasy sports aren’t as tightly regulated as other forms of gambling. In fact, though their treatment varies state by state, they are considered games of skill under the Unlawful Internet Gambling Enforcement Act of 2006, which carved them out as having “an outcome that depends on the relative knowledge of [their] participants.” A little something to bring up the next time someone makes fun of your Bachelorette fantasy league.

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How to file your sports betting taxes

Now that you have all the information you need, here’s how to actually file your sports betting taxes. 

The process will be slightly different if you’re a professional gambler, but since a comparatively small number of people fall into that category, we’ll handle it separately at the end of this section. (Head straight there if that’s you!) 

First, we’ll focus on casual bettors.

Step #1 for casual bettors: Fill out your Schedule 1

You’ll report your gambling, fantasy, and prize income on Schedule 1 of Form 1040. Remember to report income that was reported on your W-2G and/or your 1099, as well as income that was not — it’s all taxable!

Step #2 for casual bettors: Fill out your Schedule A

If you choose to forgo the standard deduction and itemize your deductions, you’ll do so using Schedule A of Form 1040. This is also where you’ll deduct your losses and initial wagers.

You'll report gambling losses on Line 16, Other Miscellaneous Deductions. Keep in mind, though, that you can't claim losses greater than your winnings.

Now we’ll move on to the pro gambling crowd.

For professional gamblers: Fill out Schedule C

If you’re a professional gambler, you won’t need to fill out Schedule 1 or Schedule A. Instead, you’ll file self-employment taxes and report your income using Schedule C, where you’ll also deduct any business expenses you may have incurred during your work.

Part I of the form is for recording your “gross receipts or sales,” which is basically your income before you claim any deductions.

Part II of the form is where you’ll claim business expenses, including losses. 

Have more questions? Keeper has a comprehensive guide to Schedule C with plenty of examples, so you won’t get tripped up on the details.

Even if you’re not a pro gambler, Keeper can help you get your sports betting income squared away this year. Odds are, you’ll have a much less stressful tax season.