If you win big in sports betting at any of the US regulated sportsbooks, odds are good you will be paying a 24 percent federal tax.  That's on top of any state tax.  One lawmaker wants to remove the federal reporting requirement.

No More 25 Percent Federal Tax on Sports Betting Winnings?

Nevada Rep. Dina Titus is behind two pieces of gambling legislation in the world of legal sports betting and casino gaming.

Titus (D-District 1) last month reintroduced The Discriminatory Gaming Tax Repeal Act, which removes that 24% federal tax on sports gambling wins.

In states like New York, this 24% turns into nearly 33% depending on how lucky (or maybe unlucky) you are by achieving winnings above the $5000 mark.  New York residents can expect sportsbooks to withhold an additional 8.82% of winnings over $5,000.

It gets worse in Illinois.  Here sports bet winnings over a mere $600 are subject to a 15% tax rate in Illinois on top of that 25%.  Illinois residents are able to deduct amounts wagered and lost — but may not deduct wagers on winning bets.  FanDuel, DraftKings, BetMGM and all other regulated sports betting apps will report your winnings to the IRS, so it's not like you'll be able to hide this playing at any of these establishments.

Pennsylvania Rep. Guy Reschenthaler (R-District 14) is also assisting Titus with sponsoring the sports betting legislation.  

“The Discriminatory Gaming Tax Repeal Act of 2025 repeals a tax that does nothing except penalize legal gaming operators for creating thousands of jobs in Nevada and 37 other states around the nation,” Titus told Legal Sports Report. “Illegal sportsbooks do not pay the .25% sports handle tax and the accompanying $50 per head tax on sportsbook employees, giving them an unfair advantage.

“I once asked the IRS where the revenue from the handle tax went in the federal budget, and they didn’t even know,” she continued. “It makes no sense to give the illegal market an edge over legal sportsbooks with a tax the federal government does not even track.”

But before you get too excited, it should be noted that Titus and Reschenthaler have worked on similar legislation in the past.  Each time (in 2019, 2021, and 2023) the measures failed.

Threshold on Reporting Slot Wins

The SLOT Act would raise the minimum threshold for reporting from $1,200 to $5,000 and provide a framework for future adjustments relative to inflation.  The amount hasn't changed in 50 years.

"Updating a Reagan-era gaming regulation is not just a priority for my constituents in Las Vegas, it is a commonsense fix that affects the growth of legal gaming in local and Tribal communities across the country,” Rep. Titus. said “Shutting down slot machines for low-dollar amounts pushes people toward the illegal market, and flooding the IRS with automated, outdated forms helps no one. This legislation will ease the paperwork burden on businesses and players while ensuring our tax code reflects economic reality.”

The SLOT Act only applies to brick and mortar slot machines, not online.