The Kansas City Chiefs, looking to make history with a three-peat win, are again headed to the Super Bowl, this time to face the Philadelphia Eagles.
However, if you are among the 68 million people expected to bet on the big game, you need to know that taxes are part of the equation.
So, since tax season has started, here’s what you need to know about what your Super Bowl 2025 bet has to do with your tax return.
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Super Bowl 2025
The American Gaming Association reports that nearly 68 million people bet on last year's Super Bowl, waging over $23 billion. According to the AGA, that was up from the $16 billion spent during the previous year’s game.
“This... record interest in wagering marks a full circle moment for the U.S. gaming industry,” AGA President and CEO Bill Miller said in a release about last year’s event.
States with legal sports betting
Legal sports betting, including online betting, has expanded across the United States in the last few years. That’s mainly because of a 2018 U.S. Supreme Court decision that allowed states to decide whether to legalize sports betting.
Now, the District of Columbia and most states allow some form of online sports betting, while another nine states only allow retail sports betting. Sports betting is illegal in Alabama, Alaska, California, Georgia, Hawaii, Idaho, Minnesota, Missouri, Oklahoma, South Carolina, Texas, and Utah.
Super Bowl gambling winnings
If you are one of the millions who placed a bet last year, you need to know that the IRS considers sports betting to be gambling. And income from gambling winnings is taxable.
It doesn’t matter if those winnings come from sports betting online, from the casino, or as a result of a big Powerball lottery jackpot win. The IRS expects you to report your winnings on your federal income tax return.
- Usually, the payer (e.g., the casino, the state lottery, the online sportsbook, 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.
Claiming gambling losses on your tax return
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, your losses, dates, places, and payers associated with that gambling.
Remember that, like the federal government, most states tax income (including gambling winnings), although some states don't allow deductions for gambling losses. If you're unsure how to report gambling winnings and losses from the state you reside in, or from a different state, check with a tax professional when it's time to file your taxes.
By the way, you’ll report your winnings (or claim your losses) from Super Bow 2024 on the returns you file in early 2025.
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