Taxes on Your Gambling Winnings – You Owe Uncle Sam a Piece No Matter How Much You Won

When you’re gambling at a casino, you may win a few bucks here and there and leave with more dollars than you brought with you. It may be as little as $20, or as much as $1,000. When cashing out you were never presented you with a form to declare your winnings to the IRS. If you think you’re home free, think again. As a U.S. citizen, you owe Uncle Sam a piece of the action regardless of the amount. Many players think that just because they were not given a tax form there’re home free. Not so.

So, what does get reported to the IRS? Larger amounts that are won at gambling establishments such as casinos, lottery retailers, horse race tracks and off-track betting parlors. They will issue a form W-2G, one copy to you and one to the IRS. Here are some details:

Machine Games

$1,200 or more won at a slot machine, video poker, video keno, video blackjack, etc. This only applies to a single jackpot payout amount. Accumulated credits are credit meter wins and do not count.

$1,200 or more won at a live bingo game will also trigger a W-2G, and $1,500 or more at a live keno game (minus your wager amounts).

The casino will not withhold any gambling taxes from awards in the $1,200 to $1,500 range provided you present a valid photo ID and social security number. If you do not provide this information, 28% will be withheld.

Live Table Games

Winnings from live table games are not reportable on a W-2G, except if there is a very large prize amount offered for a small wager, such as a dollar bet for a shot at a progressive table jackpot, where the winning odds are over 300/1 and the win is more than $600. For example, Caribbean Stud offers a huge progressive jackpot for wagering only $1, if you’re lucky enough to hit a Royal Flush.

If you win $600 or more in any other wagering game, such as horse, dog racing or sports betting, and the amount is at least 300 times your bet minus your wager amount, the establishment will gift you with a W-2G. If your winnings exceed $5,000 and the amount is more than 300 times your bet, 25% will be withheld. The same withholding percentage also applies to any cash prize of $5,000 or more in poker or other card tournaments minus the buy-in amount.

Winnings on state lottery games such as lotto, numbers, scratch-offs, etc. can be collected at your local retailer up to $600. Any more and you’ll have to visit the main lottery office in your community, where a W-2G also awaits you. This information is from the New York lottery. Other states may have different rules.

Winnings on Daily Fantasy Sports (DFS) contests at this time are considered games of skill. DFS sites will issue a 1099-MISC, not a W-2G for winnings of $600 or more.

Video Lottery Terminals (VLT)

$600 or more in winnings from any class II ​Video Lottery Terminal game will also invite a W-2G. This includes any winnings on machines at jurisdictions that are operated by a state lottery. For example, New York State has nine race tracks with VLT’s that are pseudo slot and video poker machines.

Deductions

The good news in all of this is that gambling losses are tax deductible but only up to the amount of your winnings, and only if you itemize deductions on your tax return.

The IRS wants to make sure that you indeed lost what you claim you lost, so a record of all your losses is required. Win- loss statements are available from most major casinos at the end of the year, provided you used your player’s club card when playing machines. Save those losing scratch-off tickets, Lotto, Powerball, and Mega-Millions tickets, daily numbers, Quick Draw, OTB, etc.

For losses on Daily Fantasy Sports contests, the IRS position at this time is unclear. Because of the skill factor, your winnings are in the hobby category. Therefore, any losses would not be deductible, although this situation could change at any time.

You don’t have to record the tickets on your tax statement, but they may be necessary if you are audited. All the IRS wants to know is the type of wager, the amount of the bet and the date of the transaction.

Blackjack Rules: Learn a Simple Basic Strategy Before You Play – Here’s How

Blackjack rules are important to understand when playing this casino table game. If played properly by using a simple Basic Strategy, the house advantage is very low, at about 0.5%.

The game is played on a table containing multiple decks of cards. (Usually six or eight). The cards are dealt from a device called a shoe or a CSM (continuous shuffle machine) by the house dealer in the casino.

The objective is for a player to have a completed hand totaling 21 or closer to 21 than the dealer’s hand. Any player’s or dealer’s hand with a sum over 21 is a bust and therefore loses.

The card values are:

2 through 9 – count as their face value

10 through King – count as a ten value

Aces – count as eleven or one

How to Play

Playing is simple. After you placing an initial wager, two cards are dealt face up to each player. The dealer also takes two cards, one face up and one down, known as a hole card.

Based on the strength of the player’s hand and the value of the dealer’s up card, the player must make one of five options:

Stand – If the player has a strong hand such as a 10, 8 totaling 18, s/he would stand by taking no additional cards.

Hit – If the player has a weak hand such as 8, 5 totaling 13, s/he may hit by requesting additional card(s).

Split – If the two cards are of equal value such as an 8, 8 the player can split by playing two hands for an additional wager.

Double Down – Player may elect to double down by requesting only one card after doubling his/her wager. One example would be a 7, 4 totaling 11. The player would hope to receive any 10-value card to make a total of 21.

Surrender – (Where permitted.) When a player has a very weak hand against a dealer’s strong hand, he/she may surrender the hand for ½ of the wager. One example would be a player with 15 and a dealer showing a 10 or ace up.

Per standard rules, a dealer must draw to a hand total up to 16 and stand (no draw) on a total of 17 or higher.

Note that the 17 rule varies between casinos. Some jurisdictions permit a dealer draw to a soft 17, (Ace + 6) others require a stand on all 17’s. Drawing a card with a soft 17 always aids the casino. Standing on all 17’s aids the player(s).

All winning hands, except for Blackjack, pay even money. A Blackjack is a two-card hand containing an Ace and any ten-value card. That payout is 3 to 2. Some casinos have reduced the BJ payout to 6 to 5. Stay away from the 6/5 games if possible. Here’s why:

Players receive an average of about four Blackjacks per hour. With a 3/2 payout at a $10 minimum table, the total win is $60, whereas a 6/5 payout would only net you $48. That’s a $12 loss per hour at a 6/5 table!

Simple Basic Strategy

Prior to playing, it is important to learn basic strategy. It is easy to comprehend and with a little practice your money can last longer at the table. Basic strategy cards are available in most casino gift shops. You can also find them on-line. Most casinos do not object to any player using the cards for reference while playing. Blackjack strategy applied properly is extremely important when playing the game.

The strategy is a blueprint for players that can greatly reduce the house edge to the aforementioned. It is easy to learn, though it does require some practice.

As previously mentioned, correct strategy is always based on the strength of the player’s two card hand against the value of the dealer’s up card. When applying this method, the player always assumes that the dealer has a ten- value card in the hole. Hence, the following strategy should be used whenever playing: Blackjack strategy applied properly is extremely important when playing the game.

Prior to Playing

Rules do vary between casinos so players should first scout the tables to look for liberal rules. In many jurisdictions the rules are posted at the table. If you do not see them, ask. Here is what to look for:

Split any pair

Double down on any two cards

Re-splitting allowed

Double after split allowed

Dealer stands on all 17’s

Surrender permitted

Here is the Simple Basic Strategy:

Player Hard Hands, (no Ace) if You Have:

8 or less, always hit.

9, double if dealer has 3 through 6, otherwise hit.

10, double if dealer has 2 through 9, otherwise hit.

11, Double against dealer 2 through 10, hit against Ace.

12, hit against 2 or 3, stand against 4 through 6, otherwise hit.

13 through 16, stand against 2 through 6, otherwise hit.

17 through 21, always stand.

Player Soft Hands, (one Ace) if You Have:

Ace 2 or 3, double against 5 or 6, otherwise hit.

Ace 4 or 5, double against 4 through 6, otherwise hit.

Ace 6, double against 3 through 6, otherwise hit.

Ace 7, stand against 2, 7 or 8, double against 3 through 6, otherwise hit.

Ace 8 or 9, always stand.

Player Pairs, if You Have:

Aces or eights, always split.

Twos or threes, split against 2 through 7, otherwise hit.

Fours, split against 5 or 6, otherwise hit.

Fives, double against 2 through 9, otherwise hit.

Sixes, split against 2 through 6, otherwise hit.

Sevens, split against 2 through 7, otherwise hit.

Nines, split against 2 through 6 and 8 or 9. Stand against 7, 10 or Ace.

Tens, always stand.

Blackjack side bets are also available at almost every table. Although tempting, the house edge increases a great deal when these options are selected, some into double digits. Always keep in mind that your bankroll is at a greater risk of a quicker depletion when making these inviting side bets.

Remember that no matter which game you choose, the house always has the edge over the long term. The benefit of applying proper strategy is to increase your chances for short term gain.

Good Luck!