How Much Is The Gambling Winnings Without Paying Taxes?

Those new to gambling often wonder how much money they win from the games tax-free. The Internal Revenue Service (IRS) would tell them to file a tax return, as they are legally bound to report their winnings as income.

All gambling winnings, whether cash or non-cash prize, are taxable by law. Still, millions of hopeful people visit any of the 450 commercial casinos in the US to earn by wagers.

Discover how much money gamblers win before the federal government takes its share.

Highlights of the Article

• Of the 4,222 gamblers, 7 won, and 217 lost more than $5000.
• The payer will withhold up to 31% of the earnings for federal income tax.
• 11% of gamblers win less than $150.
• Gamblers with the fewest wagers were 17% most likely to win than top bettors’ 5%.
• A Slovenian gambler had a net profit of $22,000 in two games.
• Casinos withhold 25% off $5,000 gambling winnings.
• Gamblers can win first prize in online gambling tournaments with millions of dollars.
• Players have won $5-7 million in prizes from progressive jackpots.

Gambling Prize Money Without Tax

A study found that in 13.5% of players who went home loaded, only a few had won over $150. Of the 4,222 gamblers, 7 won, and 217 lost more than $5000.

While there are no solid figures for gambling prizes, the study revealed that the longer and more often you play, the lower your chances of winning are.

Did You Know?

In the US, each state differs in the rates that it taxes its betting citizens. For example, Connecticut taxes its online gamblers around 18% of their winnings, which is average compared to other states.

In 2023, the Nutmeg State’s online gambling market produced $53.14 million in taxes, 14% of Connecticut’s total online GGR.

Read more to see if luck is on your side.

Average Untaxed Gambling Winnings Statistics

When you win $600 or more, gambling businesses send you IRS tax forms, commonly a W-2G, but sometimes a 1099-MISC for raffle or sweepstake prizes.

The IRS can use these forms to verify your total income when they process your tax return. If the winnings are $5,000 or greater, the business that processed your bet might withhold up to 31% of the proceeds for federal income tax.

Here’s a quick look at the gambling winnings.

1. The net win of 11% of gamblers is less than $150.

(Wall Street Journal)

In 2 years of following casino players on the Internet, the data revealed that top bettors were the ones who placed the most wagers, but only 5% of them walked away a winner.

However, 10% of the gamblers with the fewest wagers had the highest winning percentage, with 17% being winners.

2. A Slovenian gambler could have won more than $22,000 in gambling without tax deductions.

(Wall Street Journal)

Considering he made small wagers daily, he had two big winning days within two weeks, with $14,000 on each of those days. He continued for a while but was wise enough to quit when he was ahead, with a net profit of $22,000.

3. Casinos have a 25% withholding tax if winnings meet or exceed certain thresholds.

(Michigan.gov)

Federal and state levels taxed lottery, poker, race, and slot winnings. Winners of certain games and with larger takings receive IRS Form W2-G from the payer.

However, winners only receive this form if the profit meets these thresholds:

• More than $600 in gambling winnings, with a minimum of 300 bets, excluding bingo, keno, slot machines, and poker tournaments
• More than $1,200 from slot or bingo
• More than $1,500 in keno
• More than $5,000 in poker

4. The biggest online gambling tournaments’ first prizes are millions of dollars, drawing in more players.

(Casino.org)

Big winners have emerged due to the expansion of mobile and online slots. In recent years, players have won $5-7 million in prizes from progressive jackpots, leading to some life-changing wins.

Here are the prizes of the most popular gambling games:

• Poker: $7-10 million
• Lottery: $200-900 million

Conclusion

While gambling is all up to luck, winning is not in the cards. Top-tier gamblers play, spend, and earn money for entertainment. It is not for anyone trying to make a living.

Gambling winnings statistics keep your expectations realistic. If it’s no more fun and you start losing more than you can afford, quitting is the best but the hardest decision.

No matter the amount, remember to keep track of your gambling winnings, as the tax authorities always want a cut.