Football season is in full swing in the United States. College and professional games fill the television screens of fanatic American fans.
They also are of interest to gamblers.
U.S. bettors drop more money on National Football League (NFL) and National Collegiate Athletic Association (NCAA) football games every year than on any other sport. The American Gaming Association (AGA) says that U.S. bettors are expected to legally wager $30 billion on the 2025 NFL season alone.
And while the NCAA’s month-long March Madness men’s college basketball tournament produces a sizeable and sustained amount of betting, the NFL championship is the single biggest betting day in America.
For Super Bowl LVIX last February, the AGA estimated that U.S. bettors would place a record $1.39 billion in legal bets on that one game.
Again, that’s just the legal wagering.
Legal vs. illegal bets: Despite the growth across the United States of legal sports betting following the Supreme Court’s ruling that ended the federal ban on most bookmaking outside Nevada, many bettors still head to their bookies.
There are lots of reasons why. Anonymity, easier access, better odds from unregulated operations, more financial flexibility (i.e., more credit or loans), and, of course, avoiding taxes.
But all of those perceived advantages carry their own costs beyond the cliché physical intimidation tactics of bookies’ enforcers.
Tracking taxable income: Uncle Sam also feels the pain of illegal betting. A government report last November found that the U.S. Treasury lost $1.4 billion in tax due from unreported gambling winnings.
That revenue loss is why the IRS urges all of us contemplating placing a bet, on sports or any other games of chance, to do so at legal gambling establishments.
All gambling income is taxable income. That’s easier to enforce when bets are made and paid through casinos and other authorized outlets.
Those legal operations typically take taxes off the top of a winner’s proceeds.
The wager payor also files information returns that are copied to the IRS detailing the winner’s details and winning amounts.
That definitely makes it a lot easier for the nation’s tax collector to get all the due tax money.
Criminal complications: There’s another good reason to make legal sport bets. Illegal wagering is, well, illegal.
The IRS gets involved here, too.
IRS Criminal Investigation (IRS-CI), the tax agency’s law enforcement arm, investigates a variety of offenses tied to illegal gambling. Annually, it initiates more than 30 illegal gambling cases, and obtains a 92 percent conviction rate for prosecuted cases.
That’s an impressive number of illegal wagering convictions, enough to warrant this weekend’s By the Numbers recognition.
And here are some other IRS-CI gambling figures.
Over the past five fiscal years, 96 defendants have been convicted of crimes tied to illegal gambling, receiving prison sentences averaging between five and 33 months in federal prison.
This last February, 10 men pleaded guilty to managing a multimillion-dollar sport betting operation deemed Red44.
IRS-CI says its bookmaking and betting activities took place online via an offshore server located in Costa Rica. The organization accepted an estimated $2 billion in wagers during its existence.
As part of plea agreements in the Red44 case, the defendants agreed to pay more than $19.7 million in excise tax restitution to the IRS from their acceptance of wagers from sports betters across the United States, and to satisfy any income tax obligations that remain outstanding.
IRS-CI also is keeping an eye on crypto and gambling.
"Over the last few years, we’ve seen a number of online crypto casinos offering options for sports betting,” said IRS-CI Chief Guy Ficco. "Many are based offshore and don’t follow Know Your Customer protocols, specifically to attract anonymous users who may be involved in illicit activity. If you want to gamble, do it safely and legally.”
Place your bets safely: The IRS and IRS-CI urge individuals who want to place bets to use state-licensed gambling operations and platforms that are legal in their jurisdictions.
Steer clear of offshore and crypto-based gambling platforms that attract anonymous users by avoiding accepted protocols.
Never accept payment to place bets on behalf of someone else or gamble to obscure the source of funds. You could find yourself in the middle of a money laundering conspiracy.
Finally, of course, report all your gambling winnings when you file your annual tax return. If you don’t and are caught, you could face civil and criminal penalties.
Remember, too, that ignorance of the tax law does not exempt you from tax filing and paying responsibilities.
If you or a sports betting fan friend are unsure about wagering tax obligations or have questions about reporting gambling income, talk to a tax professional.
You also can get more information on reporting gambling income and other tax-related inquiries, visit IRS.gov’s Gambling Income and Losses Page.
Wager responsibly: Finally, the American Gaming Association points out that September is Responsible Gaming Education Month.
Have A Game Plan.® Bet Responsibly.™ is part of the educational process. The public service campaign is designed to educate new and seasoned sports bettors about responsible sports wagering.
Since launching the game plan campaign in 2019, the AGA has brought together sports leagues, teams, media, sportsbook, and other key industry stakeholders to make sports betting education approachable for fans.
If you or someone you know is having issues with betting, there are support options.
The National Problem Gambling Helpline and its affiliates provide services to assist people and families affected by problem gambling. Take the self-assessment, or call or text the 24-hour confidential hotline at 1-800-GAMBLER.
Many states also provide ways to deal with gambling concerns. The National Council on Problem Gambling’s interactive map can help you find resources in your state.
You also might find these items of interest:
- Gamblers lose part of their tax break in OBBB
- 15%-to-25% tax rate range is part of proposed internet gambling template
- Your Super Bowl LIX prop bets paid off; now be ready to pay tax on the winning wagers
