Yes, and the rules changed for the 2026 tax year in a way that can leave a break-even bettor owing money. Most of what you will read on forums is out of date.
This is a summary of publicly available tax rules, not tax advice. We are not accountants. Gambling taxation is genuinely complicated, several points below are unsettled, and the 2026 changes make professional advice more worthwhile than it used to be. If you bet meaningful volume, talk to a CPA.
The change that matters
For tax years beginning after 31 December 2025, the amount you can deduct for gambling losses is limited to 90 percent of those losses, still capped at your gambling winnings.
The provision sits at section 165(d) of the Internal Revenue Code, was enacted as section 70114 of the legislation signed on 4 July 2025, and first applies to the 2026 tax year, filed in 2027. Your 2025 return is unaffected and still allows the full offset.
The arithmetic is the whole story.
| Item | Through 2025 | 2026 onward |
|---|---|---|
| Gross winnings | $100,000 | $100,000 |
| Gross losses | $100,000 | $100,000 |
| Deductible losses | $100,000 | $90,000 |
| Taxable gambling income | $0 | $10,000 |
Ten thousand dollars of taxable income on money that was never won. For a bettor grinding a one to three percent return, the ten percent disallowance alone can turn a profitable year into a losing one after tax. This is the single most consequential thing on this page and it applies whether you bet offshore or with a licensed US operator.
One further point that catches professionals specifically: the statute now permanently treats business expenses incurred in wagering as part of “losses from wagering transactions,” which pulls data subscriptions, software and travel inside the same 90 percent cap. Turning professional does not solve this, and may make it worse. Anyone considering that route for 2026 needs an accountant, not a forum.
“It was repealed.” It was not. Several bills have been introduced to reverse it. A proposed defence bill amendment was rejected by the House Rules Committee in January 2026, a Senate unanimous consent attempt failed in July 2025, and as of August 2026 nothing has passed either chamber.
“It is only proposed.” This confuses the statute with the implementing regulations. The statute was enacted in July 2025 and is in force. Proposed regulations interpreting it had a comment period that closed in June 2026. The rule applies regardless of what happens to the regulations.
The reporting obligation is not optional
The most common offshore misconception is that no paperwork means no liability. It does not work that way.
The IRS position is that gambling winnings are fully taxable and must be reported, including winnings not reported on a Form W-2G. Separately, income from illegal activities is included in gross income. The source of the money and its legality are both irrelevant to whether it is taxable.
An offshore sportsbook issues no W-2G and withholds nothing. What that changes is the paper trail, not the obligation. It also means no withholding credit on your return, so the full liability lands at filing.
The W-2G threshold changed too
The general information reporting threshold rose from $600 to $2,000 for payments made in 2026, indexed thereafter. The long-standing rule that winnings must also be at least 300 times the wager survives for sports wagering.
Worth flagging honestly: sources disagree on whether the new $2,000 figure applies to sports wagering or only to bingo, keno and slot machines, and the IRS instructions refer to “the applicable reporting threshold” without stating a figure in the sports section. If this matters to your situation, ask a professional rather than settling it from a website.
Withholding is unchanged. The 24 percent rate applies where winnings minus the wager exceed $5,000 and are at least 300 times the wager.
The netting question, which forums answer badly
You will constantly read that you can simply report your net result for the year. Be careful with that.
A casual gambler reports gross winnings as income and takes losses as an itemised deduction. You cannot net to a single line. The “sessions” approach, which allows gains and losses within a session to be combined, rests on case law and on an IRS notice that is explicitly a proposed safe harbour limited to electronically tracked slot machine play.
There is no IRS safe harbour for sports betting sessions. Advice telling a sports bettor to report an annual net has no direct authority behind it, and the question remains genuinely contested among tax practitioners.
This matters more than it used to, because gross reporting combined with a 90 percent loss cap is what produces tax on money you never kept.
Offshore accounts, FBAR and crypto
This is the most confidently wrong area on any forum, in both directions.
FBAR. A US person must file FinCEN Form 114 where foreign financial accounts exceed $10,000 in aggregate at any point in the year. Whether a sportsbook balance counts is genuinely unsettled. A 2016 Ninth Circuit decision held that offshore poker site balances were not reportable financial accounts, because the funds were used to play poker and served no other financial purpose, while holding that a money transmitter account in the funding chain was reportable. That decision binds only the Ninth Circuit, the IRS has historically asserted the opposite, and no case addressing a sportsbook specifically exists.
The practical distinction that follows from that reasoning: a pure wagering balance is arguably not a financial account, while an e-wallet or payment intermediary almost certainly is. FBAR penalties are severe. If you are anywhere near the threshold, this is a question for a specialist.
FATCA. Form 8938 thresholds start at $50,000 on the last day of the year, or $75,000 at any point, for an unmarried filer living in the US. We found no authority treating a sportsbook as a foreign financial institution for this purpose, and most bettors are below the thresholds regardless. Filing one form does not excuse the other.
Crypto. As things stand for the 2026 filing season, a foreign account holding only virtual currency is not FBAR-reportable, because FinCEN deferred that requirement pending rulemaking that remains unfinished. Important exception: if the same account also holds ordinary currency or other reportable assets, the whole account becomes reportable once the $10,000 aggregate is crossed.
Separately, crypto creates income tax questions independent of gambling. Winnings paid in crypto are valued at fair market value when received. Whether moving crypto into a sportsbook is itself a taxable disposition is unsettled, and the cautious approach is to track cost basis as though it might be. Broker reporting on Form 1099-DA began for the 2025 tax year, so the on-ramp is considerably more visible than it was even where the book itself reports nothing.
Your state may be the bigger problem
Several states tax gambling winnings but restrict or disallow the loss deduction, which can produce state tax on a net-losing year. Wisconsin does not allow casual gamblers to deduct net session losses. Massachusetts allows a deduction only for losses at certain licensed in-state establishments, which by construction excludes offshore losses entirely.
We are deliberately not publishing a list of states, because the secondary surveys we found contradict each other and at least one contains an error we could verify against the state’s own guidance. Check your state’s department of revenue directly.
Whether states will conform to the new federal 90 percent figure was still unresolved when we checked. That is worth watching.
When you genuinely need a professional
- Any year where gross winnings are large relative to your net result. That is exactly where the 90 percent cap bites hardest.
- An offshore balance anywhere near $10,000, because of the FBAR question.
- Crypto funding, for cost basis and disposition treatment.
- Considering professional gambler status for 2026 under the new expense treatment.
- Living in a state that restricts loss deductions.
Our FAQ on offshore sportsbook taxes covers the basics, and our page on offshore legality deals with the separate legal question.
Questions people ask
Do I have to pay tax on offshore sportsbook winnings?
Yes. The IRS position is that gambling winnings are fully taxable and must be reported including where no Form W-2G is issued, and income from illegal activities is included in gross income. An offshore book issuing no paperwork changes the paper trail, not the obligation.
Can I still deduct 100 percent of my gambling losses?
Not for tax year 2026 onward. Section 165(d) now limits the deduction to 90 percent of losses, still capped at winnings. The change was enacted in July 2025 and applies to tax years beginning after 31 December 2025. Your 2025 return still allows the full offset.
Was the 90 percent gambling loss rule repealed?
No. Several repeal bills have been introduced. A defence bill amendment was rejected by the House Rules Committee in January 2026 and a Senate unanimous consent attempt failed in July 2025. As of August 2026 nothing has passed either chamber, and the rule stands.
Do I need to file an FBAR for my offshore sportsbook account?
Genuinely unsettled. A 2016 Ninth Circuit decision held offshore poker balances were not reportable while a money transmitter account was, that ruling binds only one circuit, the IRS has asserted otherwise, and no case addresses sportsbooks. Penalties are severe, so this is a question for a specialist rather than a forum.
Can I just report my net winnings for the year?
Casual gamblers report gross winnings as income and take losses as an itemised deduction rather than netting to one figure. The sessions approach rests on an IRS notice that is a proposed safe harbour limited to electronically tracked slot play. There is no equivalent safe harbour for sports betting.
Sportsbooks.ag may earn a commission from some links on this page, at no extra cost to you. That does not affect our reviews, ratings or recommendations. Nothing on this page is tax or legal advice. See our affiliate disclaimer, editorial policy and how we rate sportsbooks.