Taxes on Offshore Gambling Winnings in the US (2026): What the IRS Actually Requires

Two things are true at once, friend. Your offshore sportsbook will never send you a tax form: Bovada’s own rules say it “does not report players’ account activities, winnings or losses to any government agencies.” And the IRS taxes your winnings anyway. Between those two facts sits a lot of bad advice about offshore gambling taxes (“under $600 you’re fine”, “just report withdrawals minus deposits”), and a 2026 law change that turns some break-even years into taxable ones. This page sets out what the rules actually say, with the IRS’s own words and the statute, and marks clearly where the rules run out.

Last updated: 25 September 2026. Every rule below was checked against irs.gov, the text of Public Law 119-21, Treasury’s April 2026 proposed regulations, court opinions or FinCEN, on that date. This is not tax advice. It’s a map of the rules so that your conversation with a CPA or enrolled agent starts from the right place. Where the rules are unsettled, we say so instead of picking an answer.

The Short Answer

• All gambling winnings are taxable income, whether the site is licensed in New Jersey, Curaçao or nowhere. There is no minimum amount below which winnings stop being income.
• From tax year 2026, only 90% of your losses can be deducted, and only up to the amount of your winnings, and only if you itemize. A year where you won and lost $50,000 now leaves $5,000 of taxable income.
• No W-2G means nothing. The IRS says all income must be reported “regardless of whether or not documentation was provided”.
• Crypto adds a second tax event. Spending or exchanging crypto is a disposition with its own gain or loss. Whether a deposit into a casino balance counts is something the IRS has not addressed.
• FBAR is unsettled for a cash balance at an offshore book. The one court decision says poker-site accounts weren’t reportable, and it isn’t binding precedent.

Offshore Gambling Taxes, Rule 1: Winnings Are Income, Whatever the Source

The tax code defines gross income as “all income from whatever source derived” (IRC §61). IRS Topic 419 says “Gambling winnings are fully taxable and you must report the income on your tax return.” Publication 525 goes further and says income from illegal activities “must be included in your income”. Nothing on irs.gov conditions any of this on the payer holding a licence, being in the US, or sending you a form. An offshore win is a win.

What the offshore books actually do is stay outside the US reporting system. Form W-2G obligations fall on payers engaged in a US trade or business; a company in Panama or Curaçao simply doesn’t file them. That removes the paperwork, not the duty. The IRS’s own handout on gambling calls it “a common misconception that unless you receive a Form W-2G… your gambling winnings don’t have to be reported.”

Rule 2: The 90% Loss Rule Starts With Your 2026 Return

Public Law 119-21, signed on 4 July 2025, rewrote the wagering-loss rule in IRC §165(d). The operative words: the deduction “shall be equal to 90 percent of the amount of such losses during such taxable year, and shall be allowed only to the extent of the gains from such transactions”. It applies to “taxable years beginning after December 31, 2025”, so it bites on 2026 income and shows up first on the return you file in 2027. Treasury’s proposed regulations of April 2026 restate it word for word.

What that does to real numbers:

Your year	Deductible losses (old rule)	Deductible losses (2026 rule)	Taxable gambling income, 2026
Won $10,000, lost $8,000	$8,000	$7,200	$2,800 (was $2,000)
Won $50,000, lost $50,000	$50,000	$45,000	$5,000 (was $0)
Won $100,000, lost $120,000	$100,000	$100,000 (90% of $120,000 is $108,000, capped at winnings)	$0, and the extra loss is gone

The middle row is the one that has bettors angry: you can lose money over a year and still owe tax on phantom income. Two bills to repeal the rule were introduced within days of the law passing. The FAIR BET Act (H.R. 4304) had a discharge petition filed in February 2026; the FULL HOUSE Act (S. 2230) sits in the Senate Finance Committee. On 16 September 2026 the House Ways and Means Committee voted 38–5 to report a broader digital-asset tax bill (H.R. 10357) that press reports say restores the full deduction. None of these is law as of today. The 90% rule is what applies to 2026 unless that changes, and this page will change with it.

Rule 3: Losses Only Count If You Itemize

This is the rule that catches more casual players than the 90% haircut. Losses are an itemized deduction on Schedule A. Topic 419: “You may deduct gambling losses only if you itemize your deductions.” The IRS Chief Counsel put the consequence plainly: “A casual gambler who takes the standard deduction rather than electing to itemize may not deduct any wagering losses.”

For 2026 the standard deduction is $16,100 single, $24,150 head of household, $32,200 married filing jointly. If your itemized deductions, gambling losses included, don’t beat those numbers, you take the standard deduction and your gross winnings are taxed in full. A single filer who won $20,000 and lost $12,000, with no mortgage interest or other itemized deductions, reports $20,000 of gambling income and gets no benefit from the losses at all: 90% of $12,000 is $10,800, which is less than the $16,100 standard deduction, so itemizing would leave them worse off.

And you cannot shortcut this by reporting a net figure. The IRS: “You cannot reduce your gambling winnings by your gambling losses and report the difference.” Winnings go on Schedule 1; losses go on Schedule A; the two never meet on one line.

Rule 4: What Counts as a “Win” (the Session Question)

Nobody reports every spin. The IRS’s Chief Counsel memo AM 2008-011 says a casual slot player “recognizes a wagering gain or loss at the time she redeems her tokens”: walk in with $100, cash out $300, that’s a $200 gain, even if along the way there were $1,000 of winning spins and $700 of losing ones. The Tax Court followed the same session logic in Shollenberger (2009). The memo also says players “may not net their gains and losses from slot machine play throughout the year and report only the net amount.”

Two honest caveats. The memo says of itself that it “may not be used or cited as precedent”, and a 2015 IRS proposal for a formal day-based safe harbor was never finalized. And nothing from the IRS applies the session idea to an online account. Treating each login or each day as a session is what many practitioners do; it is an extrapolation, not a rule. Pick a consistent, defensible method with your preparer and apply it all year.

Sports bets are simpler: each settled wager is a gain or a loss, and your account history has the date, stake and result of every one.

Rule 5: The Records the IRS Expects

Topic 419 requires “an accurate diary or similar record of your gambling winnings and losses” plus documents that support it. Publication 529 lists what the diary should hold: the date and type of each wager, the name and location of the establishment, who was with you, and the amounts won or lost. For an offshore account that translates to:

• Download your full transaction and bet history at least quarterly. Sites close, and closed sites take their records with them; two brands we’ve covered vanished in the same month of 2024.
• Keep the deposit and withdrawal trail: bank or card statements, and for crypto the transaction hashes and the dollar value at the time.
• Keep a diary in your own words, per session, matching the site’s history. The IRS’s list mentions the people with you and the machine number for a reason: it wants a record made at the time, not reconstructed in April.

Rule 6: Crypto Is a Second Tax Event

If you fund a book with Bitcoin, you have two separate things going on. The gambling result is one. The other is what happened to the Bitcoin. The IRS’s virtual-currency FAQ is explicit that paying for services with crypto, or exchanging it “for other property, including for goods”, is a disposition: “you will recognize a capital gain or loss” equal to the fair market value received minus your basis. Its digital-assets page lists exchanging crypto “for U.S. dollars or other currency” and “in exchange or trade for property, goods or services in any amount” as reportable.

What the IRS has not said, anywhere we could find, is whether depositing crypto to a casino and receiving a dollar-denominated balance is itself a disposition. The FAQ doesn’t mention gambling or casinos at all. Many preparers treat the deposit as an exchange (crypto out, a dollar claim in) and compute the gain there; others treat the crypto as merely held until you cash out. It is unresolved, and it’s the single most important thing to raise with your preparer if you bet in crypto. Coins you withdraw start a new basis at their value on the day you receive them.

Don’t expect a Form 1099-DA to sort this out. Those come from US digital-asset brokers, starting with 2025 transactions. An offshore casino is not a US broker and isn’t mentioned in the form’s instructions. As with the W-2G, the absence of the form doesn’t change what’s reportable.

Rule 7: A Big Win Can Mean Tax Due Before April

Nothing is withheld from an offshore payout. Topic 419 warns that with gambling winnings “you may be required to pay an estimated tax on that additional income”, and Topic 306 describes the underpayment penalty for people who didn’t pay enough during the year. The safe harbors: you generally avoid the penalty if you owe less than $1,000 after withholding, or if your payments during the year reached at least 90% of this year’s tax or 100% of last year’s. A five-figure futures win in March can put you outside those numbers by June. Form 1040-ES is the mechanism.

Rule 8: FBAR, Where the Law Runs Out

The FBAR is a separate report (to FinCEN, not on your tax return) required when your foreign financial accounts together exceeded $10,000 at any point in the year. Whether an offshore gambling balance is a “financial account” is genuinely open:

• In United States v. Hom (Ninth Circuit, 2016) the court held that the player’s PokerStars and PartyPoker accounts “do not fall within the definition of a ‘bank, securities, or other financial account'”, but his FirePay e-wallet account did, because FirePay “is a money transmitter”. The decision is marked “not for publication” and is not precedent, and the government’s argument that casinos are financial institutions was never decided because it was raised too late.
• A foreign e-wallet you use to fund the book (a Skrill or Neteller-type account) looks like FirePay, and is the clearer case for reporting.
• Accounts holding only crypto are not currently reportable: FinCEN said in Notice 2020-2 that the rules “do not define a foreign account holding virtual currency as a type of reportable account”, and the proposed change it announced has not been made.

Conservative practitioners file for a large offshore cash balance anyway, on the view that filing an FBAR that turns out to be unnecessary costs nothing, while the reverse can cost a great deal. That is a judgment call for you and your preparer; the law doesn’t settle it.

Professionals, and Your State

If gambling is your trade or business under the Supreme Court’s Groetzinger test (“full time, in good faith, and with regularity, to the production of income for a livelihood”), you report on Schedule C and can deduct expenses. The 2026 law reaches you too: the statute folds “any deduction otherwise allowable… incurred in carrying on any wagering transaction” into wagering losses, so expenses and losses together are limited to 90% and capped at winnings, and a losing year can’t be carried forward.

Your state may be harsher than the IRS. Connecticut’s Department of Revenue Services: “Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes.” Illinois: “Illinois does not allow a deduction for gambling losses.” Wisconsin allows session-level netting but no deduction for net losing sessions. A 2024 Connecticut legislative report lists about a dozen states in the same category. Check yours before assuming the federal picture is the whole picture.

The Monkey’s Take

The offshore books’ silence is the trap. No form arrives, so the year feels like it never happened for tax purposes, and then the account history you’d need to defend a session-based return isn’t there because the site changed domains or closed. The rules themselves are clear enough: winnings are income, losses help only if you itemize and only to 90% from this year, crypto is its own event, and a big win means estimated payments. The unclear parts, crypto deposits and FBAR, are exactly the ones to put in front of a professional rather than a forum. Download your history, keep a diary, and go see someone who does this for a living before the return is due, not after the letter arrives.

The book doesn’t report you. That’s the reason to keep your own records, not the reason to skip them.

This page is general information about US federal tax rules as published on 25 September 2026. It is not tax or legal advice, and it can’t account for your situation or for changes in the law, including the repeal bills described above. Consult a CPA or enrolled agent. 18+ (21+ where required) · Play responsibly. Problem gambling? In the US call or text 1-800-MY-RESET (1-800-697-3738) or text 800GAM.

Related: the legal side of offshore play, state by state, is in is online gambling legal in the USA. If your account history matters for your return, read what to do when a casino closes your account before it does, and see how the books handle large payouts in sportsbook withdrawal limits compared.

Sources: IRS Topic 419, gambling income and losses · Public Law 119-21, sections 70114 and 70433 · Treasury proposed regulations, April 2026 · IRS Publication 529 · IRS Chief Counsel memo AM 2008-011 · IRS virtual currency FAQ · United States v. Hom (9th Cir. 2016) · FinCEN Notice 2020-2.