How is Sports Betting Taxed?

In case you’re wondering, tax is the word for money that the government collects from you. If you’ve ever paid taxes, you’ll know exactly what it means. However, even those who haven’t paid taxes yet may know what they are talking about when they say, “taxes are too high.” In this article, we will discuss how sports betting is taxed and how you can be sure that you’re not paying more than you need to in taxes.

Sports Betting Is Taxed Like Any Other Betting Activity

Although most people think of sports betting when they hear the word “taxes”, it is important to remember that this is only because most people think that sports betting is illegal. The truth is that sports betting is not only legal but it is heavily regulated and taxed just like any other wager you can make at a sports bar. Here’s how it works:

The vast majority of states in America that have legalized sports betting require that you register with the state as a sports-betting business. Once you have registered, you will then be able to accept wagers from customers located in that state and you will need to pay taxes on those wagers. Like any other business, you will need to pay income taxes and, depending on the state laws, you may also be required to pay a sales tax as well.

Do You Have To Pay Sales Tax On Winning Sports Betting Picks?

One of the most confusing aspects of the legalized sports betting is that, in some states, you may be required to pay sales tax when you win money. As a matter of fact, in Texas you have to pay sales tax on your winnings even if you’re using odds movements in a game that you’ve already paid for. That’s right — in Texas, if you win money gambling on sports, you’ll have to pay taxes on those winnings. How’s that for a twisted way of thinking? Don’t worry, you’re not alone in being confused by this. Even the experts who wrote the law are somewhat baffled by this part of the legislation.

It’s not like winning and losing wagers are taxed at different rates. You’ll pay the same tax rate whether you win or lose money. The only difference is that when you win, you’ll have to pay the tax man immediately and when you lose, you’ll have to wait until you cash out your bet before you’re taxed on the earnings.

Are You Sure That You’re Not Breaking The Law?

Although it is extremely unlikely that you’ll get audited for trading sports, it’s still something to be wary of. When you register as a sports-betting business in most states, you will need to provide the government with certain information about yourself including your social security number, tax identification number and, in some cases, your driver’s license number. If the government discovers that you are breaking the law, you may end up getting fined a lot of money and even losing your business. Just remember: the burden of proof is on the person that accuses you of something. In other words, it’s not your responsibility to prove that you’re acting within the law. In most cases, you’ll simply have to be able to show that you’re not breaking any laws.

Are You Sure That The Government Is Collecting Enough Money?

Another way that taxes are high in relation to sports betting is that, in most cases, the government requires that you keep records of your wagers. If you’re asked to prove that you have paid taxes on your wagering activity, one of the first things that the government will demand is proof of your payments against the recorded wagers. It’s easy for the government to determine how much you’ve paid in taxes if it knows how much you’ve bet. In most cases, the IRS requires that you keep detailed records of your wagering activity for 3 years.

Is It Worth It?

The cost of doing business as a registered sports-betting business varies from state to state and from business to business. To find out how much it costs, you will have to contact the Secretary of State’s office in the state that you reside in. However, as a rule of thumb, you can expect to spend between $500 and $1,000 annually in taxes. If you’re already paying a lot of money in taxes, is it really worth it to become a legal sports-betting business? The answer is yes. As long as you’re able to follow the rules and regulations, there’s absolutely no reason that you shouldn’t go ahead and register. Just keep in mind that, in some states, you’ll need to pay a lot more money in registration fees than you’ll have to pay in taxes later on.

What About Unlawful Internet Gambling?

While it is perfectly acceptable to bet on sports legally and with a license, it is not okay to engage in any unlawful activity. This includes gambling on sports whether you’re located in a land-based casino or online casino. Most states, including Texas, have laws that make it unlawful to gamble online without having a physical location where you can physically go to play. If you get caught doing this, you’ll face serious legal consequences. It’s important to keep in mind that there are plenty of online casinos that don’t offer sports betting, so you won’t be hurting your chances of winning by playing online.

Additional Resources

In case you’re curious, here are some additional resources that may be of interest: