Can gambling losses from sports betting reduce my taxes? What's deductible?

I'm thinking about placing a $3,500 sports bet on the upcoming championship game. I'm trying to figure out the tax implications before I put down this much cash. If I lose the entire bet, is there any way I can claim that loss to reduce my taxes? This would be my only gambling activity for the year - I don't have any other wins or losses from casinos, lottery, or anything like that. If I win the bet, I'd profit about $2,900 but then have to pay around $725 in taxes (based on my tax bracket). But I'm wondering if I lose the $3,500, could I somehow get that $725 back through a tax deduction since my income would effectively be reduced by the loss? Or does it not work that way with gambling losses?

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18 comments

TechNinja

•8M

The short answer is that gambling losses (including sports betting) can only be deducted if you itemize deductions on Schedule A, AND only up to the amount of your gambling winnings for that year. If you have no gambling winnings, you can't deduct gambling losses at all. The IRS doesn't let you use gambling losses to offset regular income - only gambling income. So in your scenario, if you lose the $3,500 but have no other gambling winnings, you wouldn't be able to deduct anything. If you were to win different bets throughout the year totaling say $4,000, but then lost this $3,500 bet, you could deduct the $3,500 loss against the $4,000 winnings and only pay tax on the $500 difference. But without any winnings, the losses don't help your tax situation. Make sure to keep detailed records of your gambling activities (dates, locations, amounts, etc.) if you do end up with both wins and losses - the IRS may ask for documentation if you're audited.

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TechNinja

•8M

Yes, that's exactly right. If you win $500 at slots and lose $2000 on football, you can only deduct $500 of your losses (matching your winnings). The remaining $1500 loss cannot be deducted. The tax code treats gambling as a hobby, not a business for most people. For documentation, you should keep all receipts, tickets, statements and even a gambling diary noting dates, venues, games played, people you gambled with, and amounts won/lost. Credit card statements, bank withdrawals, and casino win/loss statements can help, but the more documentation you have, the better your position if audited.

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Paolo Bianchi

•8M

After spending hours trying to understand gambling tax rules for my sports betting, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me from a major headache. I uploaded my betting records and it instantly analyzed everything, showing me exactly what I could and couldn't deduct. The thing that was most helpful was how it explained the whole "gambling losses can only offset gambling winnings" rule with my actual numbers. It showed me that I needed to report ALL my winnings as income (even though I had overall losses for the year), but then I could deduct my losses up to the amount of those winnings on Schedule A if I itemized. It also flagged that I needed better documentation for some of my online bets and gave me templates for the gambling log the IRS wants to see. Honestly worth checking out if you're doing any kind of gambling.

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Paolo Bianchi

•8M

Yes, it absolutely works for sports betting! It can process those DraftKings and FanDuel statements and sort everything properly. Those platforms will only send you a W-2G if you hit certain thresholds (generally a win of $600+ with odds of 300-to-1 or greater), but you're still required to report ALL gambling winnings regardless of whether you receive a form. Regarding audit protection, it actually does help significantly. It organizes all your documentation in the exact format the IRS expects to see and provides an audit trail showing how every number was calculated. It's not just about the expense - it's about having everything properly organized and calculated according to tax law, which is especially important with gambling since it's so frequently scrutinized by the IRS.

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Yara Assad

•8M

Just wanted to follow up about taxr.ai that was mentioned above. I decided to try it with my sports betting records from this year, and it was actually super helpful. I've been betting on DraftKings and FanDuel all season and had no idea how to report everything correctly. The tool showed me that even though I was down about $1,200 overall for the year, I still needed to report about $4,800 in winning bets as income. But then it walked me through how to properly document and deduct those losses against the winnings since I itemize. It also explained that if I took the standard deduction, I'd still have to report all the winnings but couldn't deduct any of the losses - that would have been a costly mistake! It even created a proper gambling log for me automatically, which apparently is super important if you get audited. Definitely recommend it if you're doing sports betting and worried about taxes.

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Javier Morales

•8M

If you're anything like me, you've probably spent hours trying to get through to the IRS to ask about gambling deduction rules (or any tax question really). After waiting on hold for 3+ hours multiple times, I finally found Claimyr (https://claimyr.com). They have this service that gets you through to an actual IRS agent, usually within 15-20 minutes. I was super skeptical at first, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I used it to finally talk to someone at the IRS about my gambling tax situation, and the agent confirmed everything about the wins/losses rules and documentation requirements. The agent even explained a special rule I didn't know about - that if you're a "professional gambler" (which has very specific requirements), the tax treatment is completely different. Saved me from making a big mistake on my taxes after a year of serious poker playing.

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Javier Morales

•8M

It works by using an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, you get a call connecting you directly to them. It's completely legitimate - no hacking involved. They're essentially just handling the waiting process so you don't have to sit by your phone for hours. No, it's not BS. I was extremely skeptical too, but desperate after waiting 2+ hours multiple times and getting disconnected. The system called me in about 15 minutes with an actual IRS agent on the line. It was shocking how well it worked compared to my previous attempts. They don't share the cost publicly, but it was absolutely worth it to finally get my gambling tax questions answered by an official source.

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Connor O'Brien

•8M

I have to eat my words about Claimyr from my comment above. After continuing to fail getting through to the IRS on my own for another week (kept getting disconnected after 1+ hour waits), I broke down and tried it. Got a call back in 22 minutes with an actual IRS agent on the line who helped resolve my gambling tax questions. I had received a CP2000 notice claiming I hadn't reported some gambling winnings, even though I had losses that more than offset them. The agent walked me through exactly how to respond with the right documentation. For anyone dealing with sports betting or other gambling tax issues, being able to actually speak to an IRS agent and get official guidance was incredibly helpful. Saved me from potentially paying taxes I didn't actually owe. Can't believe I wasted so much time trying to get through on my own.

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Amina Diallo

•8M

Something no one's mentioned yet is that if you're doing sports betting through official channels (legal sportsbooks), they will keep track of your wagers. At the end of the year, you can request a win/loss statement that shows your total betting activity. This is super helpful for tax documentation. Also, if you hit certain thresholds (varies by type of gambling but usually over $600 with high odds), they'll issue you a W-2G form that is reported directly to the IRS, so definitely don't skip reporting those winnings!

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Amina Diallo

•8M

Offshore betting sites typically don't issue tax forms or report to the IRS since they're operating outside US jurisdiction. However, that doesn't exempt you from the obligation to report your gambling winnings - all gambling income is technically taxable regardless of where it comes from. The lack of reporting from offshore sites creates a documentation gap that puts the burden entirely on you to track and report accurately. If you've had significant winnings, you might want to get your past reporting in order. The IRS has been increasingly focused on unreported gambling income, especially with cryptocurrency transactions sometimes being used for offshore gambling.

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TechNinja

•8M

The tax code distinguishes between investments and gambling based on the nature of the activity. Business investments are considered productive economic activities, while gambling is viewed as recreational. That said, if you can document that your gambling activities constitute a trade or business (extremely difficult to prove - requires regular, full-time activity with a profit motive), you might be able to deduct losses on Schedule C instead of Schedule A. But for the vast majority of people who gamble occasionally, the IRS will only allow losses to offset wins when itemizing.

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