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.
In this guide, 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
Table of Contents
- How To Know if You Have to Pay Sports Betting Taxes
- Is Sports Betting Tax-Free?
- Does an Offshore Account Exempt You From Paying Sports Gambling Taxes?
- Online Sports Betting Taxes: Keeping Records for Tax Time
- Tracking Wins and Losses
- How to Report Sports Gambling Winnings
- Taxes on Online Sports Betting as a Hobby
- Taxes on Online Sports Betting as a Professional Bettor
- What is ZenSports?
- Tracking Your Online Betting Taxes With ZenSports
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.
Because ZenSports is not a tax agency, you will need to check your local tax laws to find out if you have to pay sports betting taxes.
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, which makes tracking all of your bets—and winnings— quick and easy.
Tracking Wins and Losses
The requirements of how you must track your wins and losses can vary depending on the country.
Let’s take a look at how the United States requires you to keep a record of your betting results:
American bettors need to keep a diary or log of both their winnings and losses. The diary would need to contain the following:
- The amounts won or lost
- The date and type of specific wager
- Name and address of the gaming establishment
The IRS recommends that bettors keep other supporting documentation, including:
- Bank statements (to substantiate an ATM withdrawal)
- Credit card statements
- Voided lottery and/or gaming tickets
- Racing schedules
Additionally, it’s important for bettors in the United States to record their wins and losses in the appropriate sections and not to record their net profits in the “Other Income” line.
Can You Write Off Losses on Your Tax Return?
Assuming we’re still looking at American bettors, the answer would be yes.
The losses are reported as an itemized deduction, which is reported under Schedule A.
However, every country is different and whether or not you can write off your losses will depend on the tax laws.
Can You Get in Trouble for Not Reporting Wins and Losses?
Fraudulent tax returns are illegal almost everywhere.
We always recommend that you follow applicable laws where you live and bet.
How to Report Sports Gambling Winnings
Just like whether you need to pay taxes on your online sports bet winnings, how to report them also varies greatly depending on your location.
For peace of mind and to maximize reporting and filing properly, we recommend consulting a tax professional on how to report sports gambling winnings.
If you feel confident, you could also research your own country or state’s specific tax laws yourself and follow those steps.
One thing that is, for the most part, common across the board is that your taxes on online sports betting will vary depending on if you file as a professional gambler or if you file as a recreational gambler.
Keep reading to see what the difference is and how it can affect your potential taxes.
Taxes on Online Sports Betting as a Hobby
Chances are, the vast majority of gamblers will be filing as recreational gamblers or those who bet as a hobby.
But ultimately, the percentage you will be taxed, if you are taxed at all, as a recreational bettor largely differs depending on your country.
Taxes on Online Sports Betting as a Professional Bettor
The rules and reporting methods for professional gamers are typically different than those who bet as a hobby or pastime.
However, in some countries, like Italy, the online betting tax structure is based on profit.
The tax rate is 20% for…
- Games of skill (including poker tournaments)
- Casino games
- Card games (including poker)
- Bingo
…while the rate increases slightly to 22% for sports betting.
However, some countries may view professional gamblers as being engaged in business and require them to report their gambling income differently.
In the United States, for example, those who file as professional bettors can net their wins and losses for the year.
However, professional bettors will need to prove their status as a professional.
The IRS will look at and take into consideration:
- The adequacy of accounting and record-keeping
- The expertise of the gambler
- The years of betting experience
- The time and effort expended in carrying on the activity
- The overall success
- The history of losses with respect to the activity
Consult your country’s tax laws to be sure if there are any different requirements for filing or reporting your online sports betting winnings as a professional versus recreational bettor.
What is ZenSports?
ZenSports is a decentralized, peer-to-peer platform where anyone can create and accept bets with anyone in the world.
The twist? There is no need for a centralized bookmaker.
We operate using a trust-less system that lets the marketplace settle bet results and disputes.
We also offer reduced betting fees compared to traditional bookmakers.
And, when you choose ZenSports for your online sports betting, you can deposit funds instantly using either cryptocurrencies or fiat.
Tracking Your Online Betting Taxes With ZenSports
Since recording your wins and losses is a big part of paying your taxes on online sports betting, it’s worth doing right.
Luckily, there is a super simple way to bet and keep track of your wins and losses: ZenSports SPORTS tokens.
When you place bets with SPORTS, you will:
- Pay discounted betting fees.
- Get cashback for reaching certain betting volumes
- Earn bonuses for performing other actions.
You’re also able to deposit and withdraw SPORTS to and from your ICONex wallet whenever you want.
When you deposit funds into ZenSports, using either Bitcoin or USD, you can then choose to exchange those funds into SPORTS via our Exchange feature.
You can use ZenSports’ SPORTS utility token to:
- Place bets
- Qualify for awesome discounts
- Redeem cashback rewards
- Score bonuses
- Other perks
Some of our promotions and bonuses that are available when you bet using SPORTS tokens are:
- Lower betting fees — Typically, the standard betting fees in ZenSports are 2.5% as the Maker and 5% as the Taker. But, when you bet in SPORTS tokens, you’ll benefit from 1% as the Maker and 2.5% as the Taker.
- Lower dispute escrow fees — The standard dispute escrow fees in ZenSports are 10% as the Maker and 5% as the Taker. When you bet using SPORTS tokens, only a 5% dispute escrow fee will be withheld as the Maker and only a 2.5% dispute escrow fee as the Taker. Say hey to major savings!
Cashback bonuses — When your betting volume reaches a certain tier, you can qualify for cashback.
