Does the IRS Report How Much I Won at DraftKings?

If you won over a certain amount of money betting at DraftKings, the online sportsbook is obligated to report your winnings to the IRS.  DraftKings and other regulated sportsbooks typically require you to provide your social security number during the registration process.

April, 2024 DraftKings is officially permitted in: Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, West Virginia, and Wyoming.

As one might imagine, not having your winnings reported to the IRS by the gambling company as opposed to you as the individual is one of the benefits of using a local pay per head bookie or agent.  Not giving up your social security number to a sportsbook company is another in light of last year's unprecedented hacking at MGM and Ceasars.

Below is our guide to each state's tax requirements where DraftKings operates. It should be noted that, no matter the state, gambling winnings are subject to the 24% withholding or you will need to declare on your tax filings.

Arizona

All gambling winnings are taxed in Arizona. The federal tax rate of 24% applies as does a marginal tax rate that can range anywhere from 2.59 - 4.50%. Larger winnings — typically $5,000 or more — will result in taxes withheld automatically.

Colorado

Federal and state taxes apply. All gambling profits are subject to a state income tax of 4.63% in Colorado.

Connecticut

6.99 percent is typically withheld on winnings in addition to having to pay the 24% federal tax.

Illinois

The Individual Income Tax Rate of 4.95% applies to sports betting and online gambling winnings. It’s also standard procedure for casinos in Illinois to withhold 25% of winnings for federal tax purposes.

Players are able to deduct amounts wagered and lost — but may not deduct wagers on winning bets.

Indiana

The gaming operator will likely send you a W-2G that is used to report your winnings on both your federal (24%) and state taxes, which in Indiana is 3.23%.

Iowa

5 percent of winnings for state and 24% for federal.

Louisiana

In addition to the 24% federal tax, you will be required to pay 5% to the state on all winnings.

Maine

7.15 percent will likely be withheld on winnings of $5000 or more plus federal taxes of 24%.

Massachusetts

Massachusetts gamblers will be taxed on sports bet winnings the same way they are on other gambling income. This means a 24% federal tax and 5% state tax.

Michigan

Gambling winnings here are subject to a 4.25 percent state income tax in addition to federal.

New Hampshire

The federal gambling tax is 25%, but you can deduct losses. For winnings over $5,000, you must complete and submit a WG-2 form to the IRS.  There is no state tax.

New Jersey

Sports bet winnings are considered income by the federal government. However, winnings can be offset by losses. Players are required to pay the 24% tax rate if they win more than $600 in a year. Additionally, New Jersey assesses a 3% state tax on all income.

New York

NY bettors can pay up to 12.7% tax on winnings plus the 24% federal. 

North Carolina

Winnings here are subject to a 6% tax plus federal taxes.

Oregon

The Oregon Lottery withholds 8% of all sports bet winnings over $1,500. Federal taxes apply here as well, with an additional 24% tacked onto gambling income exceeding $5,000.

Pennsylvania

PA has a flat-rate personal income tax of 3.07% for all taxable income — including gambling and lottery winnings.

Tennessee

Tennessee caps all winnings at 90%.  In other words they pull 10% off the top.  But this is not for tax purposes.  In addition you will be paying 25% of all winnings, provided you share your social security number. If you decline to do so, 28% of your winnings will be withheld.  The only positive is that Tennessee does not have a state tax.

Vermont

Vermont bettors are subject to an individual tax rate of 6% and 7.25% for VT residents and out-of-state bettors, respectively., plus federal tax.

Virginia

The rate at which your winnings are taxed, at the state level, depends on the amount you’ve won that year. These rates range from 2% - 5.75%.

West Virginia

West Virginia does not withhold a state tax on sports bet winnings at the state level, provided identification is submitted. With no ID, casinos are required to hold 6.5% of winnings.

Wyoming

Sportsbook operators issue 1099 forms to you and the IRS for net profits of $600 or more.  Wyoming does not have an individual income tax, so you are home free in that regard.

- Gilbert Horowitz, Gambling911.com