What is the Sports Betting Tax Rate I Have to Pay in Arizona?

With Tax Day in the US just around the corner, it's important to understand that betting sports from Arizona with one of the regulated sportsbook apps means you will need to claim your winnings.  Unlike the offshores and local bookies, the regulated companies here must report your winnings to the IRS.  Do not get confused with what the operator must pay versus what you must pay.

So what is the tax rate I need to pay on my sports gambling winnings from the great state of Arizona?

All gambling winnings are taxed in Arizona. The federal tax rate is 24% and that is in addition to an Arizona marginal tax rate that can range anywhere from 2.59 - 4.50%. With winnings over $5000, taxes are withheld automatically.

Regardless of whether you bet with the Arizona apps, offshores or locals, you will need to file your taxes.  Depending on your winnings, gamblers should consider hiring an accountant.  You'll need to do so as "other income" on Schedule 1 (Form 1040).

One thing to keep in mind is that, if you travel often, other states might want their cut of your winnings as well (i.e. if you are using the DraftKings app in Arizona and use the New York-based DraftKings app while traveling to the Big Apple).

These Arizona Regulated Sports Betting Companies Will Report Your Winnings

Typically these companies will require individuals to provide their social security number.  This is not something an offshore sportsbook will ask for.  Forget the tax aspect for a moment, entering your social security number anywhere is high risk and is something to seriously consider before opening a wagering account.

These are the Arizona-regulated apps:

    DraftKings - Best app

    FanDuel - Intuitive menu

    BetMGM - Most banking options

    Caesars - Best sign-up bonus

    BetRivers - Weekly promos

    Betfred - Daily odds boosts

    WynnBET - User-friendly

    Barstool - Loads of markets

    Unibet - Solid odds

    TwinSpires - Best for horse racing

    Hard Rock - Great live betting

    Golden Nugget - 24/7 chat

    SuperBook - Competitive lines

    Betway - Secure platform

    Bally Bet - Nice odds boosts

    Desert Diamond - Newbie-friendly

    SaharaBets - Arizona-focused

It's interesting to note that most offshore sportsbooks, as well as a significant number of local bookmakers, have been established longer than most of the names you see above.  So if time in business is a concern, you're actually better off going with an offshore sportsbook or local bookmaker.

Arizona regulated sports betting apps have very little in the way of limitations.  In fact, Gambling911.com ranks the state among the most generous when it comes to promotions, type of wagering and the competitive landscape.  The lines should also be competitive since operators pay a relatively low tax to the state of between 8% and 10%, thus not having to pass significant costs down to the consumer when compared with a state like New York where these businesses are paying more than 50%.

There are no college prop bets permitted, no eSports betting and the high demand live dealer online casinos available with offshore books are not offered with the Arizona-regulated apps.

Welcome bonuses, while not on par with the offshore books, are still decent.  Offshore sportsbooks do offer reloads and buddy referrals in most cases.

- Aaron Goldstein, Gambling911.com