How will online sports betting losses be taxed in 2025?

Thanks for the explanation! I'm still confused about one thing though. If I'm down overall for the year, does that mean I don't have to report anything at all? Or do I still need to report the winnings separately even though I lost more than I won?

You still need to report any gambling winnings as income, even if you had overall losses for the year. The IRS expects all gambling winnings to be reported on your tax return as "Other Income." If you itemize deductions, you can list your gambling losses as an itemized deduction on Schedule A, but only up to the amount of your winnings. For example, if you had $5,000 in winnings throughout the year but $5,584 in losses (for a net loss of $584), you would report $5,000 as income and could deduct $5,000 in losses if you itemize. That remaining $584 loss cannot be deducted or carried forward to future years.

Wait so if I take the standard deduction, I still have to claim all my winnings as income but can't deduct my losses? That seems really unfair! Does this mean I'd be better off itemizing deductions if I have gambling losses?

That's correct - if you take the standard deduction, you would still report all gambling winnings as income but couldn't deduct your losses. Whether itemizing makes sense depends on your overall tax situation. For many people, the standard deduction ($13,850 for single filers in 2023, likely higher for 2025) provides more benefit than itemizing. You'd need to have total itemized deductions (including mortgage interest, charitable donations, medical expenses above 7.5% of AGI, state/local taxes up to $10,000, and gambling losses) that exceed the standard deduction amount for itemizing to be worthwhile.

How exactly does it work with the betting sites? Do you have to manually upload your betting history or does it connect directly to your accounts? I use three different platforms and tracking everything has been a nightmare.

Sounds interesting but I'm skeptical about giving access to my financial info to some random website. How secure is it? And does it actually save you money or just make the process easier?

You can either upload CSV files from your betting platforms or connect directly through their secure integration system. It works with most major betting sites and consolidates everything automatically, which is super convenient if you use multiple platforms like you do. The site uses bank-level encryption and doesn't store your login credentials. It definitely saved me money because it found deductions I would have missed, especially some smaller losses I hadn't properly tracked. But the biggest value for me was the time saved and peace of mind knowing everything was done correctly.

How does this work with multiple betting platforms? I use DraftKings, FanDuel, and BetMGM and trying to keep track of everything is a nightmare. Does it handle calculating across different platforms?

I'm a bit skeptical about tax services that claim to handle specialized situations like gambling. Did it actually save you money compared to what you would have calculated yourself? I'm worried I'd pay for a service and end up with the same result I could get on my own.

It works great with multiple platforms! I was using both DraftKings and FanDuel, and it consolidated everything into one report. You just upload statements from each platform, and it automatically sorts and categorizes everything across all your accounts. Made tracking my overall gambling position much easier. For the money question - it didn't necessarily save me tax dollars since the tax rules are what they are, but it saved me hours of spreadsheet work and gave me confidence I wasn't missing anything. The peace of mind was worth it to me, especially since I was worried about potentially getting flagged for audit with gambling income.

How does this actually work? I've literally spent hours on hold with the IRS before giving up. Are they somehow jumping the queue or is this some kind of scam?

I'm extremely doubtful this is legitimate. The IRS phone system is notoriously impossible by design. There's no way some third-party service has magically solved this problem. Sounds like you're either selling something or got lucky with call timing and are attributing it to this service.

It works by continuously calling and navigating the IRS phone system automatically until it finds an open line. When it gets through, it calls you and connects you directly to the agent. It's not jumping any queue or doing anything sketchy - it's basically just handling the frustrating redial process for you. I understand the skepticism - I felt the same way! But it's literally just an automated system that does what you'd do manually (call, navigate menus, get disconnected, repeat) but can do it continuously without you having to waste your time. The IRS agent I spoke with was definitely a real IRS employee who answered my specific questions about reporting gambling winnings and losses.

Does anyone know if there's a specific format the IRS wants for the gambling log? I just have a basic spreadsheet but wondering if that's good enough.

There's no official IRS format for the gambling log. My spreadsheet worked fine as long as it included: date of each betting session, name of the betting platform/site, type of bet placed, amount wagered, amount won or lost, and the net result for each session. I also kept screenshots of all my betting confirmations which really helped during the audit. The key is consistency and completeness. Make sure you record everything, even small bets. The auditor was primarily looking to verify that I wasn't making up losses, and that I could document all my gambling activity throughout the year. Having the betting platform's year-end statement alongside my detailed log provided the corroboration they wanted.

It depends on your other potential itemized deductions. Add up your mortgage interest, property taxes, state income taxes (capped at $10,000 combined for SALT), charitable donations, and other itemizable expenses. If that total PLUS your gambling losses (up to your gambling winnings amount) exceeds your standard deduction, then itemizing makes sense. For most people, the standard deduction is higher than their itemized deductions. But if you're close, adding the gambling losses might tip you over to where itemizing becomes beneficial.

Thanks for the breakdown! I did some quick math and my other potential itemized deductions (mortgage interest, property taxes, and charitable donations) add up to about $11,300. If I add the $3,000 in gambling losses (to offset my $3,000 in winnings), I'd be at $14,300 - still below the $14,600 standard deduction. Looks like standard deduction is still better in my case, which is disappointing since I'll have to report the $3,000 in gambling income but won't get any benefit from the losses.

How does this actually work? Does it just keep calling the IRS for you or something? I've been on hold for literally hours trying to ask about reporting requirements for my DraftKings winnings.

Yeah right. Nobody gets through to the IRS that quickly. Even tax pros I know say it takes hours or days of attempts. Sounds like some kind of scam to me.

It uses a system that navigates the IRS phone tree and holds your place in line. When an agent is about to answer, you get a call connecting you directly to them. It's not doing anything you couldn't theoretically do yourself, but it saves you from having to wait on hold forever. I was skeptical too before trying it. But after spending 3+ hours on separate days trying to get through myself with no success, I was desperate. The IRS agent I spoke with gave me crucial information about how to document my betting losses properly that potentially saved me from an audit.

Which state are you in? I'm in NJ and now I'm worried about this.

I'm in Massachusetts. Each state has their own rules - I believe in NJ you can deduct gambling losses but only against gambling winnings, similar to federal. But always check with your state's department of revenue to be certain, as these rules change occasionally, especially with the expansion of legal online betting. Massachusetts doesn't allow gambling loss deductions at all on the state return, which means you pay state tax on all your winnings regardless of losses. Several other states have similar limitations.

Thanks for bringing this up! I haven't received any W-2G forms yet, but I did have a few big wins that were well over $600. Do you know if the betting sites report this information to the IRS directly? I'm wondering if they'll know about my winnings even if I don't report them (though I plan to report everything properly).

Yes, the betting platforms do report those large winnings to the IRS using your SSN, so the IRS will know about them regardless of whether you receive a W-2G or not. The platforms are required to report certain large wins, and some will automatically withhold taxes on major payouts. If you don't report winnings that were reported to the IRS, you'll almost certainly get a notice from them later. That's why it's crucial to keep good records of both wins AND losses throughout the year, so you can properly document everything if needed.