The Super Bowl is more than just the pinnacle of American sports; it is the single largest day for sports wagering in the United States. In 2026, with sports betting legalized in nearly forty states, millions of casual fans will place everything from “prop” bets on the length of the national anthem to high-stakes wagers on the final score. However, many of these bettors are unaware that the Internal Revenue Service (IRS) views every winning ticket as taxable income—and thanks to recent legislative changes, even “breaking even” can result in a tax bill.
Under the 2025 “One Big Beautiful Bill” (OBBBA) Act, the rules for the 2026 tax year have shifted significantly for the casual gambler. Understanding how the IRS treats your Super Bowl wins and losses is essential to avoiding an audit or an unexpected debt come next April.
1. The “Every Dollar” Rule: Winnings are Income
The most common misconception among sports bettors is that they only need to report “net” profit at the end of the year. The IRS, however, requires you to report all gambling winnings as “Other Income” on Schedule 1 of your Form 1040.
If you bet $100 on the Super Bowl and win $200 (receiving $300 total), your taxable income is the $200 profit. You cannot simply subtract your losses from other games during the year and report a single number. You must report the “gross” winnings, regardless of whether you received a tax form from your sportsbook.
2. The 90% Rule: A New Reality for 2026
Historically, if you won $1,000 on the Super Bowl but lost $1,000 on other games throughout the year, your tax liability was zero—provided you itemized your deductions. Starting in 2026, the OBBBA has introduced a “haircut” on gambling loss deductions.
Currently, casual gamblers can only deduct 90% of their gambling losses, and those losses are still capped at the total amount of their winnings.
Example of the “Phantom Income” Trap: Suppose you win $5,000 on a Super Bowl parlay but lose $5,000 on various basketball games later in the month.
Gross Winnings: $5,000 (Reported as income)
Allowable Loss Deduction: $4,500 (90% of your $5,000 loss)
Taxable “Phantom” Profit: $500
Even though you broke even financially, you are now required to pay income tax on $500 that you never actually “kept.”
3. Reporting Thresholds and Form W-2G
Sportsbooks and casinos are required to report certain winnings to the IRS using Form W-2G. For sports betting, a W-2G is generally triggered if:
- Your winnings are $600 or more, AND
- The payout is at least 300 times the amount of the wager.
If you hit a massive long-shot prop bet (e.g., the first score being a safety), the sportsbook may automatically withhold 24% for federal taxes. It is vital to remember that even if you do not receive a W-2G, you are still legally obligated to report the income.
4. The Itemization Hurdle
To deduct any losses at all, you must itemize your deductions on Schedule A. For the vast majority of Americans, the “Standard Deduction” (which is roughly $15,750 for single filers in 2025/2026) is higher than their itemized expenses.
If you take the Standard Deduction, you must report 100% of your Super Bowl winnings as income, but you get zero deduction for your losses. This can push you into a higher tax bracket or reduce your eligibility for other tax credits.
5. State Tax Variables
While federal law is uniform, state laws vary wildly.
- High-Tax States: New York and New Hampshire take a significant cut of gambling revenue, and most states with income taxes will expect their share of your Super Bowl win.
- No-Tax States: In states like Nevada, Florida, or Texas, there is no state-level income tax on your winnings.
- The “No-Loss” States: Some states, like Illinois, do not allow you to deduct gambling losses at all, even if you itemize on your federal return.
6. Professional vs. Casual Bettors
If you gamble for a living (as your primary source of income), you may file as a professional using Schedule C. This allows you to deduct losses as business expenses and avoid the 90% “haircut” applied to casual fans. However, the IRS has a very high bar for what constitutes a “professional,” and you will be subject to self-employment taxes on your net profits.
Key Takeaways for Super Bowl Sunday
- Keep a Log: The IRS requires a “contemporaneous diary” of wins and losses, including dates, types of bets, and amounts.
- Save Digital Records: Download your win/loss statements from mobile apps like DraftKings or FanDuel before the year ends.
- Prepare for the “Haircut”: Budget for the fact that 10% of your losses are no longer deductible starting in 2026.
Sources and Links
- IRS: Topic No. 419 Gambling Income and Losses
- Tax Foundation: Online Sports Betting Taxes by State
- NerdWallet: How Sports Betting Taxes Work
- TurboTax: Can You Claim Gambling Losses on Your Taxes?
- Baker Newman Noyes: Sports Betting Taxes: 1099 vs. W2G
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