Professional gamblers report their gambling income and related expenses on Schedule C as self-employment income. Net Schedule C income is also subject to federal income tax and self-employment tax, plus any other state income tax.
Record-Keeping for Gambling Activities
The IRS expects professional players to keep records of their stakes and winnings. This can be a modest diary of your casino losses and winnings, though it should include the date, the kind of gaming activity you engaged in. Also, the name and location of the gambling establishment or whether you played online, and how much you have won or lost.3
You should keep other documentation. You can substantiate your winnings and losses with:
- Form W-2G: “Certain Gaming Winnings.”
- Form 5754: “Statement by Person(s) getting their Gambling Winnings.”
- Betting tickets, canceled checks, bank withdrawals, credit records, statements of actual winnings, or payment slips that are provided to you by the gaming establishment.
- Account statements from wagering websites.
A Game-by-Game Breakdown
The IRS shows that you should record the following to support your winnings and your losses for specific betting transactions whenever possible:
- Keno: keno tickets copies purchased that were validated by the gaming establishment.
- Slot machines: A record of the keno machine number and all winnings by date and time the keno machine was played
- Table games (craps, blackjack, poker, roulette, baccarat, or wheel of fortune).
- Bingo: A record of the number of casino games played, the cost of tickets also purchased and amounts that are collected on winning tickets. Additional records include any receipts from the casino or parlor
- Racing (harness, horse, or dog): A record of the races, amounts of bets, amounts collected on winning tickets.
- Lotteries: A record of tickets that are purchases, dates, winnings, and also the losses. Supplemental records include the unredeemed tickets, payment slips, and also winnings statements.
Withholding on Gambling Winnings
Gambling winnings are also subject to withholding for federal income tax at a rate of 24% as of 2020. If you win over $5,000 from sweepstakes, lotteries, wagering pools, or other staking transactions, or anytime the prizes are at least 300 times the amount wagered.
The institution should report the amount of the winnings and any of the tax withheld on Form W-2G in these.
John Ford has been writing online gambling content for over 18 years. Born and raised in the heart of the Short Pump, Virginia, John’s journey through the casino industry began on the casino floor itself. He started as a dealer in various games, including blackjack, poker, and baccarat, cultivating an understanding that only hands-on experience can provide. John’s passion for writing casino guides stems from his casino experience and his passion for helping fellow punters. His articles are more than reviews; they are narratives that guide both novices and seasoned players through the labyrinth of online casinos.
