Are you ready for some football betting? As the NFL’s 2026 preseason games begin, betting on the United States’ favorite sport ramps up, too. If you’re among those who wager around $30 billion each season on America’s professional football matchups — and $136 billion more on additional sports (and other) events — remember that your winnings are taxable income.
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Global soccer gained some U.S. fans after many of this summer’s World Cup games, including the championship match, were played within our borders.
But let’s be honest. The National Football League (NFL) still rules here. With the arrival of the 2026 season — the annual NFL Hall of Fame game was Aug. 6; pre-season games start this week (Thursday, Aug. 13) — gambling across the country also increases.
U.S. gamblers legally wager around $30 billion on NFL games each year in the United States through regulated sportsbooks, according to figures tracked by the American Gaming Association. That amount represents bets from preseason games through the playoffs to the biggest single betting day of all, the Super Bowl.
Betting is now the top U.S. pastime: And things aren’t slowing down. Betting on professional and collegiate sports has grown each year since the U.S. Supreme Court in 2018 ruled that states could regulate such wagering.
Currently, 38 states and the District of Columbia allow gambling on sporting events.
So, it’s no surprise that gambling has become America’s favorite pastime. We (and yes, I do occasionally buy a lottery ticket when the jackpot is ginormous) spent more on sports bets — $166 billion in 2025 — than we did last year on movies, arts, museums, and music combined, according to a Fortune magazine article.
Those billions in bets don’t even include amounts from several states where tribal casinos aren’t required to publicly disclose their handle, notes Fortune’s news editor Catherina Gioino.
We can’t overlook the amounts that are flowing through and to prediction market platforms like Kalshi and Polymarket.
The urge to drop a few (or more) bucks on just about anything also is spreading beyond playing fields. As prediction markets and prop betting gain popularity, The New York Times reports that more couples are integrating bets them into their wedding celebrations.
How quaint that we once rolled our eyes at matrimonial skeptics who thought marriage itself was a big enough bet.
Betting income is taxable: With all this expanding gambling, especially as we head into peak sports betting season here in the United States, make this the perfect time to for a friendly nag reminder that the Internal Revenue Service considers your gambling winnings taxable income.
That means keeping track of your bets, both wins and losses. Then, when filing season rolls around next year, detailing the amounts on your annual Form 1040 filing.
Sure, some people still place illegal bets with bookies (often costing themselves and Uncle Sam), but the Supreme Court ruling and technology have meant more of us turn to legitimate betting outlets to place wagers.
In these cases, the gambling establishments generally collect bettors’ personal data, including a tax identification number (usually your Social Security number) and share it and your winning amounts with the IRS via Form W-2G.
This required third-party reporting means the tax agency will know if you don’t include the earnings on your annual tax return.
Losses now offer less tax relief: The tracking of your losses also is important. They can help you ease the tax bite on winnings.
But that gambling loss tax offset has been trimmed thanks to a provision in the One Big Beautiful Bill Act (OBBBA).
Starting this tax year, bettors can count only 90 percent of their losing wagers, instead of the prior tax law’s full gambling losses allowance, against their taxable winnings.
Again, you’ll need accurate and complete records of your wins and losses to fully report and deduct applicable amounts. Truing to reconstruct them, or worse make them up at tax time, are bets you don’t want to make.
You can find more on reporting gambling income and other tax-related inquiries at IRS.gov’s Gambling Income and Losses Page. You also can, of course, talk to a tax professional.
Prediction market taxation uncertainty: You especially might want to consult a tax pro if some of your income is from prediction markets.
As these options have gained in popularity, critics — notably the U.S. gambling industry — argue that the prediction markets’ sporting event contracts are thinly disguised sports bets that are cheating the U.S. Treasury of taxes.
The prediction markets disagree. They say event contract oversight falls under the federal Commodities Future Trading Commission (CFTC), not the more restrictive state governments.
States, however, are pressing for their part of the prediction markets’ sports events contracts. Some have initiated legislative proposals. Others have gone to court.
More than 20 lawsuits and cease-and-desist actions are pending across the country, filed by state attorneys general (as well as gaming regulators, tribal governments and private plaintiffs) in an effort to reach a decision on whether the platforms constitute financial derivatives under federal law or gambling under state law.
The eventual answer will determine whether states retain any regulatory or taxing authority over the industry.
No federal tax stance yet: At the federal level, there’s no question as to whether income from prediction market payouts are taxable income. It is.
But the IRS has not yet announced just how prediction market money will be taxed.
As noted in an earlier post on this matter, tax experts point to several federal tax possibilities for prediction market winnings. They could be treated as gambling income, capital gains income, or as earnings from options, swaps, and futures contracts.
Each tax possibility has specific rules and requirements for reporting and possible ways to offset the taxable amounts. So, whatever ultimate decision is made on prediction markets’ status (and tax treatment), anyone who participates in (and makes money from) event contracts should consult a tax professional.
And that brings up back to an already accepted (and mentioned earlier) federal tax move because tax redundancy here definitely is useful. Keep good records.
That way, you should be able to deal with whatever tax circumstances the IRS and states (or courts) finally decide apply to prediction market money.
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