Did You Bet on the Super Bowl? Don't Forget the Taxes

The Super Bowl is done and fans are talking about the Chiefs and the ads, but what about sports betting taxes?

football on stacks of money
(Image credit: Getty Images)

The Kansas City Chiefs won Super Bowl LVII. And people are talking about the ads, and Rihanna's halftime show. But if you’re one of the estimated 50 million people who bet on the Super Bowl, it’s good to remember that it’s not all fun and games because unfortunately, some tax is involved. So, here’s what you need to know about sports betting and taxes.

Super Bowl 2023 Sports Betting Taxes

A key rule of sports betting and taxes is that sports betting is gambling, and income from gambling winnings is taxable. It doesn’t matter if those winnings come from sports betting online, straight from the casino, or as a result of a big Powerball lottery jackpot win, you need to report your winnings on your federal income tax return.

Usually, the payer (e.g., the casino, the state lottery, online sports book, etc.) will issue an IRS Form W2-G. If your winnings exceed a certain amount in some situations, the payer will withhold 24% for taxes. But even if you don’t receive a Form W2-G, the IRS expects you to report income from your gambling winnings as “other income” on your Form 1040.

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Gambling Losses

What About Gambling Losses? Gambling losses are generally deductible on your federal income tax return, but only to the extent of your winnings, and if you itemize deductions. If you take the standard deduction, which most taxpayers do, you can’t deduct your gambling losses.

In any case, keep good records. If you itemize, you should be able to show the IRS the amounts of your gambling winnings, and your losses, and dates, places, and payers associated with that gambling.

Sports Betting Laws

Sports betting and sports betting online has expanded across the United States in the last few years largely because of a 2018 U.S. Supreme Court decision that allowed states to decide whether to legalize sports betting. That 6-3 ruling in a case brought by the state of New Jersey against the NCAA, NFL, NBA, NHA, and MLB, struck down a 1992 federal law that essentially allowed sports betting in Nevada, but not in other states.

"Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own," the Supreme Court wrote. As a result, sports betting is currently legal in some form or another, in more than thirty states and the District of Columbia. 

Keep in mind that like the federal government, most states tax income (including gambling winnings) but some states don't allow deductions for gambling losses. If you're unsure of how to report gambling winnings and losses from the state where you reside, or from a different state, check with a professional when it's time to do your taxes.

How Many People Bet on the Super Bowl?

According to estimates from the American Gaming Association (AGA), twenty percent of American adults were expected to bet more than $16 billion on Super Bowl LVII. The AGA says that this year's betting totals would be more than double last year’s, due in part to additional states legalizing sports betting in the twelve months or so.

Thirty million Super Bowl 2023 bets were expected to be placed online, and about one in five bets on the big game were likely through sports books, according to AGA estimates. Other Super Bowl LVII betting happened among friends or in betting pools (some legally and some illegally).

In a news release, AGA’s president and CEO Bill Miller says that, “every year, the Super Bowl serves to highlights the benefits of legal sports betting.” According to Miller, some of those benefits include having a regulated market to protect bettors, increased engagement for sports media, and more tax revenue for states across the country.

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Kelley R. Taylor
Senior Tax Editor, Kiplinger.com

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.