You cannot get a refund on gambling winnings themselves, but you may owe less tax than you think if you had losses

The IRS treats gambling winnings as taxable income that you must report. Once you report the winnings, you cannot get that money back as a refund. However, if you gambled and lost money in the same year, you can deduct those losses—but only up to the amount of your winnings. This deduction can reduce your tax bill or increase your refund, depending on your overall tax situation.

The key difference: winnings are income you owe tax on. Losses are a deduction that offsets that income. You report both on the same tax form, and the net result affects what you owe or what comes back to you.

Key Takeaways

  • Gambling winnings are taxable income and cannot be refunded, but losses you had in the same year can reduce the amount of tax you owe on those winnings.
  • You can only deduct gambling losses up to the amount of your gambling winnings—you cannot use losses to create a refund if you had no winnings.
  • You must itemize deductions on Schedule A to claim gambling losses; the standard deduction does not include them.
  • The IRS requires you to report all gambling winnings, including those from casinos, online betting, lottery tickets, and horse racing, on Form 1040 and Schedule 1.
  • Keeping detailed records of both wins and losses throughout the year makes it much easier to claim losses when you file.

How gambling winnings and losses work on your tax return

When you win money from gambling, that amount is income. The IRS requires you to report it on your tax return, usually on Form 1040 and Schedule 1. Your employer or the gambling venue may also send you a Form W-2G if your winnings exceed a certain threshold (typically $600 for most gambling, $1,200 for slot machines, $1,500 for bingo or keno, and $5,000 for tournaments). If you receive a W-2G, the IRS already knows about the winnings, so you must report them.

Gambling losses work differently. You can deduct losses, but only if you itemize deductions on Schedule A instead of taking the standard deduction. The deduction is limited: you cannot deduct more in losses than you reported in winnings. If you won $3,000 and lost $5,000, you can only deduct $3,000 in losses. The extra $2,000 in losses cannot be used to reduce other income or create a larger refund.

This means if you had no winnings in a year, you cannot deduct gambling losses at all, even if you lost significant money. The IRS only allows losses as an offset to winnings, not as a standalone deduction.

What counts as a gambling loss you can deduct

A gambling loss is money you spent on gambling activities where you did not win. This includes losing bets at casinos, online sportsbooks, horse racing tracks, dog racing tracks, poker rooms, bingo halls, and lottery tickets. It also includes losses from slot machines, table games, and any other form of wagering where money changed hands and you came out behind.

The loss is the amount you spent minus what you won from that same activity. If you spent $500 on lottery tickets and won $100, your loss is $400. If you spent $1,000 at a casino and left with $800, your loss is $200. You add up all your losses across all gambling activities for the year and compare that total to your total winnings.

You cannot deduct losses from casual bets with friends, losses from games of pure chance where no money officially changed hands, or money you spent on travel to reach a casino or track. You can only deduct the actual money lost on the gambling itself.

Why you need to itemize deductions to claim losses

The standard deduction is a flat amount the IRS lets you subtract from your income without listing specific expenses. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married filing jointly. Most people take the standard deduction because it is simpler and often larger than their actual deductions.

Gambling losses are not part of the standard deduction. To claim them, you must itemize deductions on Schedule A, which means listing out specific deductions like mortgage interest, state and local taxes, charitable donations, and gambling losses. You only benefit from itemizing if your total itemized deductions exceed the standard deduction for your filing status.

For example, if you are single, the standard deduction is $14,600. If your itemized deductions (including gambling losses) total $12,000, you are better off taking the standard deduction. But if they total $16,000, you itemize and save $1,400 in taxable income. Gambling losses only help you if they push your itemized total above the standard deduction threshold.

Records you need to keep for gambling losses

The IRS does not require a specific form to claim gambling losses, but it does require proof. You need to keep records that show when you gambled, where you gambled, how much you won, and how much you lost. Without documentation, the IRS can disallow your deduction entirely if you are audited.

For casino gambling, keep your player's club card statements, receipts from the casino cage, credit card or bank statements showing withdrawals and deposits, and any W-2G forms you received. For online gambling, download and save your account statements showing deposits, bets placed, and withdrawals. For lottery tickets, keep the tickets themselves or receipts showing the purchase date and amount. For horse racing or sports betting, keep tickets, receipts, or account statements.

A simple log works too: write down the date, location, type of gambling, amount wagered, and amount won or lost. The more detail you have, the easier it is to defend your deduction. If you cannot produce records, the IRS will not let you claim the losses, even if you know you lost money.

How gambling losses affect your refund or tax bill

If you won $5,000 and lost $3,000, your net gambling income is $2,000. That $2,000 is added to your other income and taxed. If you itemize deductions and have no other deductions, you would report $5,000 in winnings and $3,000 in losses on Schedule A, reducing your taxable income by $3,000.

Whether this results in a larger refund or a smaller tax bill depends on your total tax situation. If you had taxes withheld from your job and your total tax liability (after the gambling loss deduction) is lower than what was withheld, you get a refund. If your total tax liability is higher than what was withheld, you owe money. The gambling loss deduction is just one piece of that calculation.

The deduction never creates a refund on its own. It only reduces the amount of income you are taxed on. If you had no other income and no other deductions, and your only activity was gambling where you won $5,000 and lost $3,000, you would owe tax on $2,000 of income. You would not get a refund unless you had taxes withheld from somewhere else.

Reporting gambling winnings and losses on your tax return

Start by reporting all gambling winnings on Form 1040, line 5z (or the current equivalent, as line numbers change yearly). If you received a W-2G, the amount on that form goes here. If you had winnings that did not generate a W-2G, you still report them.

Next, if you are itemizing deductions, go to Schedule A. There is a line for gambling losses. You enter the total amount of losses you had during the year, but capped at the amount of winnings you reported. If your losses exceed your winnings, you can only deduct up to the winnings amount.

Attach your records—receipts, statements, W-2G forms, and your gambling log—to your return or keep them in a safe place in case of audit. The IRS does not require you to mail records with your return, but you must have them available if asked.

What happens if you do not report gambling winnings

If you received a W-2G, the IRS already has a record of your winnings because the gambling venue reported it. If you do not report it on your return, the IRS will catch the discrepancy and send you a notice. You will owe tax on the unreported winnings plus interest and possibly penalties.

If you had winnings that did not generate a W-2G (for example, small online betting wins or lottery tickets), the IRS may not know about them unless you are audited. However, not reporting them is still illegal. If you are audited and the IRS finds unreported winnings, you face the same penalties and interest.

Reporting winnings is the safest and legally required approach. The tax you owe on winnings is usually less than the penalties and interest you would owe if caught not reporting them.

Frequently Asked Questions

Can I deduct gambling losses if I did not win anything that year?

No. Gambling losses can only be deducted up to the amount of gambling winnings you had in the same year. If you had no winnings, you cannot deduct losses, even if you lost thousands of dollars. The loss is simply not deductible for tax purposes.

Do I have to report small gambling winnings?

Yes, all gambling winnings must be reported, regardless of size. If you received a W-2G, the IRS knows about it and you must report it. If you did not receive a W-2G but had winnings, you should still report them. The threshold for a W-2G varies by gambling type, but the reporting requirement applies to all winnings.

What if I gambled in multiple states or countries?

You report all gambling winnings and losses on your federal tax return, regardless of where the gambling occurred. Some states also tax gambling winnings, so you may need to file a state return as well. Keep records showing where each win or loss occurred in case a state tax authority asks.

Can I claim gambling losses if I use the standard deduction?

No. Gambling losses can only be deducted if you itemize deductions on Schedule A. If you take the standard deduction, you cannot claim gambling losses. You must choose between the standard deduction and itemizing; you cannot do both.

What if the casino or online site did not send me a W-2G?

You still must report the winnings. The W-2G is a record for the IRS, but your obligation to report winnings exists whether or not you receive the form. If you had significant winnings and did not receive a W-2G, contact the gambling venue to request one, or report the winnings based on your own records.