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Do I have to pay taxes on sports betting?

2021-10-12 07:31:00 1800 Versions

Congratulations! You’ve had some success with online sports betting.

But before you spend, or save, that extra cash, there is one thing you need to keep in mind—taxes.

The biggest question you have is most likely, “Do you pay taxes on online sports betting?”

Unless you’re a tax pro, chances are you could benefit from some guidance on sports betting come tax time.

We’ll walk you through:

  • How to figure out if you have to pay sports betting taxes

  • How to keep records for your online sports betting

  • How to report your winnings

  • And more


How To Know if You Have to Pay Sports Betting Taxes 

This will strictly vary from country to country—there is no catch-all law for reporting betting taxes, unfortunately.

In countries where it is legal, like the United States, there are still many different rules and regulations both for bettors and online sports betting sites and apps.

Sometimes betting establishments, like casinos, legally have to pay tax on their profits. 

In some cases, the bettor must also pay tax on their winnings. 

Taxes can vary greatly—and it all depends on how you file and how much your “gambling income” is.

Is Sports Betting Tax-Free?

Typically, sports betting is not tax-free.

However, it does depend on your total winnings and where you are betting from.

There are a number of countries where gambling is legal but only the casinos and bookies pay taxes, which means you wouldn’t be taxed on your winnings. 

A few of these countries include:

  • Austria

  • Australia

  • Belgium

  • Canada

  • Italy

  • Germany

  • Romania

  • The UK

  • Denmark

Certain countries require casino operators to pay license fees in addition to taxes on gambling, but the exact numbers they’re required to pay will vary from state to state. 

For example, states can choose to base their gambling taxes on:

  • Turnover 

  • Net profit 

  • Player loss

However, in the United States, bettors are required to pay taxes on all of their sports betting winnings. 

So, whether or not you receive a W-2G, the income you “earned” is required to be reported on your income tax return.

In the US, reportable gaming income includes:

  • All sportsbook winnings

  • Horse or dog racing

  • Bingo winnings

  • Lottery winnings

  • Sweepstakes

  • Game shows

  • Raffle ticket winnings

  • Prize winnings

  • Gross winnings from all types of casino games

Because the laws vary so drastically from country to country, it’s best to play it safe and consult a tax professional.

Does an Offshore Account Exempt You From Paying Sports Gambling Taxes?

It’s common for bettors to think that if they’re holding funds in an offshore account in an online gambling site, that the money is not yet considered taxable. 

However, in the United States, the IRS has stated that citizens “…are taxed on income that is available to you, regardless of whether or not it is in your possession.”

This means that while you could argue that the money in your offshore betting account isn’t readily available or “in your possession”, you are still able to access the money to place bets and continue earning profits and therefore are required to pay taxes on it.

Because offshore accounts are still visible to federal tax agencies, they should never be used as a way to shelter money from taxes. 

But remember, this is just the case in the United States. 

If you are placing bets and paying taxes in another country, you will likely face different tax regulations regarding sports gambling taxes.

Online Betting Taxes: Keeping Records for Tax Time

Just like laws vary for reporting and recording your gambling wins and losses, there are a handful of countries that require no gambling tax for online sports betting.

A few of these include:

  • The United Kingdom

  • Canada

  • Germany

  • Austria

  • Ireland

  • Malta 

In the UK, players do not pay taxes on their online sports betting winnings. Instead, gambling sites pay a 15% levy on their earnings. 

Still, for countries who do require you to keep a record of your winnings, keeping track could be migraine-inducing.  

Lucky for you, ZenSports uses cryptocurrency and blockchain technology, 

Topic Financial ManagementBetting-EssentialsBetting-StrategiesAsian Handicap