Every dollar you win gambling is taxable income. There is no minimum below which gambling winnings are tax-free - if you win $50 at a poker table, it is technically income. The IRS is equally clear that gambling losses are deductible only if you itemize deductions, and only up to the amount of your gambling winnings (and, for tax years beginning after 2025, only 90% of the losses). If you win $5,000 and lose $8,000 in the same year, you pay tax on $5,000 and the extra $3,000 of losses disappears entirely - no carryforward.
Winnings: 100% taxable, reported as Other Income on Schedule 1. No threshold. No netting against losses unless you itemize.
Losses: Deductible ONLY if you itemize on Schedule A. Limited to the amount of gambling winnings reported, and for tax years beginning after 2025 only 90% of the losses are deductible (IRC §165(d)(1), as amended by OBBBA Sec. 70114). No carryforward. Excess losses are gone forever.
If you take the standard deduction (most people): You pay tax on all your gambling winnings and get zero deduction for losses.
Gambling establishments issue Form W-2G when winnings exceed certain thresholds. Receiving a W-2G means the casino has already reported that winning to the IRS. Not receiving a W-2G does not mean the income is not taxable - it is. All gambling income is taxable regardless of whether a W-2G is issued.
| Game Type | W-2G Issued When | Withholding Required |
|---|---|---|
| Slots / Bingo / Keno | Winnings at or above the reporting threshold ($2,000 minimum for 2026 payments) | No regular gambling withholding; 24% backup withholding only if no TIN is furnished |
| Poker tournaments | The applicable reporting threshold (see Form W-2G instructions; the instructions do not state a separate poker figure, and Pub. 1099 lists poker tournaments at $2,000 or more - verify before relying) | No regular gambling withholding if Form W-2G is filed; 24% backup withholding only if no TIN is furnished |
| Horse racing / Jai alai | Winnings at or above $2,000 for 2026 payments AND 300-to-1 or greater odds | 24% if winnings minus wager exceed $5,000 and are at least 300 times the wager |
| Lottery | Winnings at or above $2,000 for 2026 payments AND at least 300-to-1 | 24% if winnings minus wager exceed $5,000 |
| Sports betting | Winnings at or above $2,000 for 2026 payments AND at least 300-to-1 odds | 24% if winnings minus wager exceed $5,000 and are at least 300 times the wager |
| Table games (blackjack, craps, roulette) | Generally not subject to W-2G | Table games are rarely withheld - but winnings are still taxable |
Rev. Proc. 2015-29 established the session method for slot machine gamblers - and by analogy, IRS guidance has extended this concept to other casino games. Rather than reporting each individual pull of a slot machine or each individual hand as a separate transaction (which would produce enormous gross winnings and losses), a gambler can report their net results from a single session of gambling.
A "session" is a single visit to a casino or gambling establishment. All activity during that visit at the same type of game (e.g., all slot machine play during one casino visit) is aggregated. If you put $500 into slot machines and walk away with $700 during a session, you report $200 of net session winnings - not $700 of gross winnings and $500 of losses. If you walk away with $300, you have $200 of session losses (only deductible if you itemize).
A gambler who is in the trade or business of gambling - meaning they pursue gambling full-time in good faith, with regularity and continuity, as a means of livelihood - is a professional gambler and reports gambling income and expenses on Schedule C. The professional gambler can deduct ordinary and necessary business expenses (travel, meals, subscriptions, entry fees) against gambling income. For tax years beginning after 2025, however, IRC §165(d)(2) treats those expenses as wagering losses, so together with gambling losses they are deductible only up to 90% and only to the extent of gambling gains - a professional gambler can no longer use a net gambling loss to offset other income.
The IRS and courts apply a facts-and-circumstances test. The nine hobby loss factors (Treas. Reg. §1.183-2) are relevant. Most recreational gamblers do not qualify as professionals no matter how much they gamble. Professional gambler status requires genuine profit motive, businesslike conduct, and usually dependence on gambling as a primary livelihood.