If you placed sports bets through DraftKings, FanDuel, BetMGM, Caesars, Fanatics (formerly PointsBet), bet365, or any other NJ-licensed sportsbook in 2025, your winnings are taxable income. Both the IRS and the New Jersey Division of Taxation expect you to report it.

The good news: reporting sports betting income is straightforward once you understand what the sportsbooks send you, what the IRS and NJ expect, and where the numbers go on your returns.

Greg Monaco is a NJ-licensed CPA (License #20CC04711400) who prepares tax returns for sports bettors. Here's his step-by-step guide to getting it right.

Step 1: Download Your Year-End Tax Statements

Every major NJ sportsbook provides a year-end tax summary or activity statement. These documents show your total wagers, total winnings, total losses, and net results for the calendar year.

Log into each sportsbook you used in 2025 and download these statements. Check the "Tax Information," "Account," or "Documents" section of your account settings.

If you used multiple platforms - which most NJ sports bettors do - you need statements from all of them. Your tax return needs to account for your total activity across every platform.

Common platforms for NJ bettors include DraftKings, FanDuel, BetMGM, Caesars Sportsbook, Fanatics (formerly PointsBet), and bet365. Each has a slightly different process for accessing tax documents, but all are required to make them available.

Step 2: Understand What Forms You Might Receive

Form W-2G

Sportsbooks issue a W-2G when a single bet's proceeds (payout minus the wager) are at least $600 and the payout is at least 300 times the original wager. Most casual bettors won't receive many W-2Gs from sports betting - the 300:1 odds requirement means it primarily applies to parlays and long-shot bets.

Federal withholding of 24% generally applies when proceeds exceed $5,000 and the payout is at least 300 times the wager. If federal tax was withheld, it appears on the W-2G and is credited on your tax return.

Starting with the 2026 tax year, the W-2G reporting threshold for slots, bingo, and keno increased from $1,200 to $2,000 (indexed for inflation beginning 2027). The sports betting threshold ($600 at 300:1 odds) is unchanged. Remember: even if the threshold went up and you receive fewer W-2G forms, every dollar of gambling winnings remains reportable.

Other forms you might receive

You may receive a W-2G for certain individual wager wins. Some platforms may also issue 1099 forms for promotional prizes or other non-wager payouts. Payment apps like PayPal and Venmo can issue a 1099-K in certain situations; rules for 1099-K reporting thresholds have changed multiple times and vary by year. Regardless of which forms you receive - or don't - you must report all gambling winnings.

No form doesn't mean no tax. Many sports bettors don't receive any tax forms because their individual wins don't hit the reporting thresholds. That doesn't make the income nontaxable. The IRS requires you to report all gambling winnings regardless of whether you received a form. (IRS Topic 419)

Step 3: Calculate Your Numbers

For federal purposes, you need two numbers: total gambling winnings for the year and total gambling losses for the year.

Total winnings means every winning bet - every single one, not just the ones reported on W-2Gs. Your sportsbook year-end statements will show this.

Total losses means every losing bet. Again, your sportsbook statements are the primary source.

If you used multiple sportsbooks, add up the totals from all platforms.

For NJ purposes, you need the net: total winnings minus total losses. If the result is positive, that's your NJ net gambling income. If the result is negative, report zero - NJ doesn't allow net gambling losses. (NJ Division of Taxation - Gambling Winnings)

Step 4: Report on Your Federal Return

Report total winnings on Form 1040, Schedule 1, Line 8b ("Gambling income"). This is your gross winnings from all gambling activity.

Deduct losses on Schedule A, Line 16 ("Other itemized deductions - gambling losses"). This requires you to itemize deductions. Your loss deduction cannot exceed your total winnings.

Key distinction between 2025 and 2026: For 2025 returns being filed now, you can deduct 100% of losses up to your winnings. For 2026 activity (filed in 2027), the deduction is capped at 90% of losses under the OBBBA's amendment to Section 165(d). Read the full explanation of the 90% cap

If you take the standard deduction ($15,750 single / $31,500 MFJ for tax year 2025) instead of itemizing, you cannot deduct any gambling losses federally. Your gross winnings are fully taxable. This is where the SALT cap increase to $40,000 becomes relevant for NJ residents - if the higher SALT cap pushes your itemized deductions past the standard deduction threshold, you benefit from itemizing and can claim gambling losses too.

If you have high-volume activity, attach a supporting statement to your return summarizing total winnings and total losses by platform. This preempts IRS questions and aligns with the NJ supporting statement requirement (making both returns consistent).

Step 5: Report on Your NJ-1040

NJ handles gambling differently than the federal return. Report net gambling income (winnings minus losses, not below zero) on the NJ-1040 under "Net Gambling Winnings."

If your net is positive, you owe NJ income tax on that amount at your marginal rate (1.4% to 10.75%).

NJ advantage for 2026: While the federal government now caps loss deductions at 90%, NJ still allows full 100% netting. A break-even gambler may owe federal tax on phantom income but owe zero NJ tax on the same activity.

If you report net gambling winnings, attach a supporting statement showing total winnings and total losses. This is required by the NJ Division of Taxation. (NJ Treasury - TB-20(R))

Any NJ withholding from sportsbooks (3% on certain reportable winnings) is credited against your NJ tax liability. Report these on the NJ-1040 as tax payments.

Common Situations for NJ Sports Bettors

Free Bets and Bonus Credits

Tax treatment of promotional credits can be confusing. The conservative and generally recommended position is that the full payout from a bonus bet counts as gambling income, since you had no cost basis in the promotional credit. For example, a $200 bonus bet that pays $600 is most safely reported as $600 in gambling winnings. Some bettors argue that the promotional value should offset the winnings, but the safer approach - and the one that avoids IRS disputes - is to report the full payout and discuss any alternative positions with a CPA.

This catches many bettors off guard, especially those who receive large sign-up bonuses during football season or March Madness promotions.

Parlays and Same-Game Parlays

A parlay that wins is taxable on the net gain - payout minus your wager. If you bet $50 on a six-leg parlay and win $8,000, your gambling income from that bet is $7,950.

Because parlays can produce high payouts relative to the wager, they're more likely to trigger W-2G reporting (the 300:1 odds threshold). This means the IRS already knows about the win.

Cash-Out and Early Settlement

If you use the "cash out" feature to settle a bet early at a reduced payout, that's a completed bet. The cash-out amount minus your original wager is your gain (or loss) on that bet.

Betting Across Multiple States

If you travel and place bets through sportsbooks licensed in other states - say, placing bets in Pennsylvania or New York while visiting - those winnings may be taxable in the state where you placed the bet. As a NJ resident, you'll also report the income on your NJ-1040 but can claim a credit for taxes paid to the other state.

Record-Keeping Best Practices

The IRS recommends maintaining a contemporaneous gambling log - meaning you record activity as it happens, not from memory months later. For sports bettors, the sportsbook platforms do most of this work for you, but you should still maintain your own records. (IRS Publication 529)

Download year-end statements from every platform before they potentially expire or become inaccessible. Keep a spreadsheet or log that consolidates activity across all platforms. Save screenshots or exports of account activity. Track free bets and bonuses separately since they have a zero cost basis. Note any bets placed while physically in a different state for multi-state filing purposes.

If you're audited, the IRS will want to see documentation that supports the losses you claimed. Having organized records makes an audit dramatically easier.

Where to Find Your Tax Statements

Each platform has a different process. Here's a general guide:

DraftKings: Log in, go to Account, then Tax Information, and download your Year-End Summary. DraftKings typically makes these available in late January.

FanDuel: Log in, go to Account, then Transaction History or Tax Information. FanDuel provides a year-end summary and any applicable W-2G or 1099 forms.

BetMGM: Log in, go to My Account, then Account Statements, then Tax Documents. BetMGM provides annual summaries.

Caesars: Log in, go to Account, then Tax Forms or Tax Information. Caesars provides year-end activity summaries.

If you can't find your tax documents, contact the sportsbook's support. They are required to provide this information.

When You Should Work with a CPA

Most casual bettors with modest activity can handle their own reporting. But if any of the following apply, professional help is worth the investment:

You used three or more sportsbooks and need to consolidate
You received W-2G forms that don't match your actual net results
You gambled in multiple states
Your total gambling activity (wins plus losses) exceeds $10,000 for the year
You're evaluating whether to itemize deductions
You received a 1099-K from PayPal or Venmo related to gambling transactions
You're a high-volume bettor concerned about phantom income under the 2026 rules
You want to evaluate whether you qualify as a professional gambler

The cost of a CPA who specializes in gambling taxes is usually far less than the tax savings from proper loss documentation and reporting.

Key Takeaway

Reporting DraftKings and FanDuel income is straightforward once you know the process: download all platform statements, report gross winnings on federal Form 1040 Schedule 1 Line 8b, deduct losses on Schedule A Line 16 if you itemize, and report net gambling income on the NJ-1040. For 2025 returns, you can still deduct 100% of losses. For 2026 activity, the federal deduction is capped at 90% - but NJ still allows full netting. A CPA who understands both systems can minimize your combined tax bill. Learn about our gambling tax services

DraftKings and FanDuel Tax Guide for NJ: How to Report Your Sports Betting Income in 2026