You cannot get a refund on gambling losses, but you may owe less tax if you report them correctly

The short answer: you cannot get money back from the government because you lost money gambling. But if you won money gambling and also had losses in the same year, you can subtract those losses from your winnings when you file your taxes. This reduces the amount of tax you owe on what you won — it does not create a refund.

The IRS treats gambling winnings as income. That means if you won $5,000 at a casino or through sports betting, you report that $5,000 as income on your tax return. If you also lost $3,000 gambling that same year, you can deduct those losses, which brings your taxable gambling income down to $2,000. You pay tax only on the $2,000, not the full $5,000. This is a deduction, not a refund — it lowers your tax bill rather than putting money in your pocket.

Key Takeaways

  • Gambling losses can only reduce the tax you owe on gambling winnings; they cannot create a refund or reduce other income like wages.
  • You must itemize deductions on your tax return to claim gambling losses — the standard deduction does not include them.
  • The IRS requires documentation of both wins and losses, such as receipts, tickets, or statements from the gambling venue.
  • Gambling winnings are reported on Form 1040 and Schedule 1, and losses are claimed on Schedule A if you itemize.
  • If your losses exceed your winnings, you cannot carry the extra loss forward to future years or backward to past years.

What counts as a gambling loss you can deduct

A gambling loss is money you spent on gambling activities where you did not win anything back, or where your payout was less than what you put in. This includes losses from casinos, racetracks, poker games, lottery tickets, online betting sites, and sports betting apps. The loss is the difference between what you spent and what you received.

For example: you spend $200 on lottery tickets over a year and win $50. Your deductible loss is $150. Or you go to a casino, put $500 into slot machines, and walk out with $200. Your loss is $300. You can deduct that $300, but only if you also had gambling winnings that year to offset it against.

One important limit: you can only deduct losses up to the amount of winnings you had. If you won $2,000 and lost $5,000, you can deduct only $2,000 of the losses. The extra $3,000 in losses cannot be deducted, cannot reduce your other income (like your paycheck), and cannot be carried to next year's taxes.

You must itemize deductions to claim gambling losses

Most people use the standard deduction when they file taxes. The standard deduction is a flat amount the IRS lets you subtract from your income without listing what you spent the money on. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly (these amounts change each year).

If you want to deduct gambling losses, you cannot use the standard deduction. Instead, you must itemize deductions, which means listing out specific expenses on Schedule A of your tax return. When you itemize, you add up all your deductible expenses — mortgage interest, property taxes, charitable donations, medical expenses, and gambling losses — and subtract that total from your income.

Itemizing only makes sense if your total deductions add up to more than the standard deduction. If you have no mortgage, do not donate to charity, and your only deduction is $1,500 in gambling losses, itemizing would give you a $1,500 deduction. Using the standard deduction would give you a $14,600 deduction (for 2024, single filer). In that case, the standard deduction is better, and you would not deduct the gambling losses at all.

Documentation the IRS expects for gambling losses

The IRS does not take your word for gambling losses. You need to keep records that show what you spent and what you won. The type of documentation depends on where you gambled.

For casinos and racetracks, keep your receipts, tickets, and statements. Many casinos issue annual statements to regular players showing total wins and losses. If you gambled at multiple locations, gather receipts from each one. For online gambling and sports betting apps, read or print your account statements showing deposits, bets placed, and payouts. For lottery tickets, keep the tickets themselves or receipts showing the purchase date and amount. For informal games like poker with friends, keep a written record of the date, location, people involved, and the amount you lost.

The IRS may also ask for a diary or log where you wrote down gambling activity as it happened — the date, location, type of gambling, amount wagered, and amount won or lost. This is stronger evidence than trying to reconstruct records months later. If you are audited and cannot produce documentation, the IRS will disallow your deduction.

How gambling winnings and losses appear on your tax return

Gambling winnings are reported on Form 1040, the main federal income tax form, and also on Schedule 1 (Additional Income and Adjustments to Income). The winnings go on the line for "other income." If the gambling venue issued you a Form W-2G (a document casinos and some other venues send when you win above a certain amount), you report that amount.

If you won money but did not receive a W-2G, you still report the winnings on your return. The IRS tracks large wins through the venues' reports, so underreporting creates a mismatch that can trigger an audit.

Gambling losses are reported on Schedule A (Itemized Deductions), on the line for "other miscellaneous deductions." You can deduct losses only up to the amount of winnings you reported. If you won $3,000 and lost $5,000, you write $3,000 on the losses line, not $5,000.

What happens if your losses are bigger than your winnings

If you lost more money gambling than you won, you cannot deduct the extra losses. The IRS does not allow gambling losses to reduce your wages, investment income, or other sources of income. Gambling is treated as a separate category, and losses stay within that category.

You also cannot carry unused losses forward to next year or backward to a previous year. If you lost $4,000 and won $1,000 in 2024, you can deduct $1,000 in losses on your 2024 return. The remaining $3,000 is gone — you cannot use it on your 2025 return even if you have big winnings that year.

This is one reason gambling losses are different from business losses or investment losses, which have different rules. The IRS considers gambling a personal activity, not a business or investment, so the loss rules are stricter.

State taxes and gambling winnings

Federal taxes are only part of the picture. Many states also tax gambling winnings, and some states have different rules than the federal government. A few states do not tax gambling winnings at all, but most do. Some states tax winnings at a flat rate (for example, 6.35% in Illinois), while others tax them as regular income at your normal state tax rate.

State rules on deducting losses vary. Some states follow the federal rule — you can deduct losses only up to winnings. Other states do not allow any deduction for gambling losses. Check your state's tax website or speak with a tax preparer who knows your state's rules, because you may owe state tax even if your federal tax bill is low.

Frequently Asked Questions

Do I have to report small gambling winnings?

Yes. The IRS requires you to report all gambling winnings, regardless of amount. Casinos and online betting sites report large wins to the IRS on Form W-2G, but you are required to report all wins, even if you did not receive a W-2G. Unreported winnings can trigger an audit.

Can I deduct gambling losses if I do not itemize?

No. Gambling losses can only be deducted if you itemize deductions on Schedule A. If you use the standard deduction, you cannot deduct gambling losses. You have to choose one or the other — you cannot use both.

What if the casino gave me a W-2G but the amount is wrong?

Contact the casino and ask them to issue a corrected Form W-2G. The IRS receives a copy of the W-2G, so if the amount on your tax return does not match the W-2G they have on file, it will flag your return for review. Get it corrected before you file.

Can I deduct losses from gambling I did illegally?

The IRS does not care whether the gambling was legal where you live. If you had winnings from any gambling activity and losses from the same activity, you can deduct the losses up to the winnings. However, you may face other legal consequences depending on your state's laws.

If I had no winnings, can I deduct losses to reduce my other income?

No. Gambling losses cannot reduce your wages, investment income, or any other type of income. They can only reduce gambling winnings. If you had no winnings, you cannot deduct the losses at all.