We are honoured by this recognition and remain dedicated to delivering trusted legal representation and lasting tax relief solutions across the Dallas-Fort Worth area. An IRS tax lawyer can represent taxpayers during audits, reconcile discrepancies with reported winnings, and provide guidance on federal tax compliance. For experienced assistance, The Law Offices of Nemeth & Flores can help Dallas–Fort Worth residents review gambling income, ensure accurate reporting, and handle complex situations efficiently. Yes, all winnings from online gambling, sweepstakes, and other games of chance are treated the same as in-person winnings and are fully taxable. Federal withholding is 24% where required (for example, net winnings over $5,000 from sweepstakes, wagering pools, and lotteries, or payouts with odds at least 300-to-1); noncash withholding may be computed at 24% or 31.58% depending on method. Failure to report gambling income can result in penalties, interest, and potential audits.
Nonresident aliens are taxed at a flat 30% on most US-source gambling winnings under §1441, and the casino or state lottery commission typically withholds the full amount at the cashier. Have foreign or US gambling income on a return you haven’t filed yet? Professional gamblers follow different rules – wagering losses (and, beginning 2026, wagering-related expenses) are deductible on Schedule C against gambling income only, with the 90% limit also applying. The broader OBBBA gambling rewrite, including changes for professional gamblers, is unpacked in our analysis of major gambling tax changes under the OBBBA. Residual US tax If US tax exceeds the credit, you owe the difference; if foreign tax is higher, the excess generally carries forward 10 years (and back 1 year)

• Yes, you can spend too much on tickets, but it’s rare to hear about someone blowing their life savings overnight.
• Casino or Las Vegas nights (also referred to as « bazaars ») are also regulated because they offer the opportunity to play games of chance, such as roulette, craps, blackjack and poker for a prize.
• Raffles and lotteries might look similar on the surface, but they offer completely different experiences.
• Raffle tickets are offered at the event entrance or in exchange for contributions.
• The 30% is generally final unless a treaty reduces it – most US treaties don’t carve out gambling income, so the full rate often applies.
• Raffle prizes, while potentially valuable, typically do not match the scale of lottery jackpots and are often predetermined items like electronics, trips, or even cars.

Net winnings that don’t meet or exceed the applicable reporting threshold aren’t subject to reporting, withholding, or backup withholding. However, if the person who wins more than the applicable reporting threshold doesn’t provide a TIN, you must apply backup withholding to the full amount of the winnings from the tournament at the backup withholding rate of 24%. Winnings and losses of the participant from other poker tournaments you have sponsored during the year aren’t taken into account when determining the applicable reporting threshold.

What is required in the permit application?

Many individuals underestimate the impact of gambling income tax, only to face complications when filing their annual return. By understanding the regulations, applying for necessary licenses, and adhering to prize limitations, you can host a successful and legally compliant raffle. Following state and federal rules when hosting a raffle is essential to avoid legal issues and ensure a fair, transparent process. Always verify online sales permissions before including this option.

What types of gambling income do I need to report?

Backup withholding applies if the winnings meet or exceed the applicable reporting threshold but not more than $5,000 and are at least 300 times the wager. If the winner of reportable gambling winnings doesn’t provide a TIN, you must backup withhold on any such winnings that aren’t subject to regular gambling withholding. If regular gambling withholding is required, the winner must sign Form W-2G, under penalties of perjury, stating that they are the sole owner and that the information listed on the form is correct. File Form W-2G for every person to whom you pay gambling winnings meeting or exceeding the applicable reporting threshold if the winnings are at least 300 times the amount of the wager. If the person receiving the winnings isn’t the actual winner, or is a member of a group of winners, see Specific Instructions for Form 5754,later. The total amount, not just the payments in excess of the applicable reporting threshold, is subject to backup withholding.

• Casino gaming is based on a random number generator (RNG) system, especially in virtual casinos.
• As a class 3 licence holder you can engage a third-party to help you to conduct gambling including issuing tickets online and managing the payment of these.
• Considered illegal lotteries.
• In some regions, raffles are only legal if run by registered nonprofits.
• Online versions of the game also exist and are commonly offered by iGaming websites.
• You might have invested hours and some money over the years, but the reward could be astronomical.
• Maybe it’s a few hours, a day, or even a week before you know the outcome.

How to run a raffle fundraiser covers the full planning and compliance process. Online raffle ticket sales are restricted or prohibited in several states, including Arkansas, California, and New Mexico. If your organization is in one of these states, you cannot legally run a raffle. This guide is for informational purposes and does not constitute legal advice. Considered illegal lotteries. For planning, compliance, pricing, and execution, see how to run a raffle fundraiser.
If I want to dream big, I’ll play the lottery knowing the odds are stacked against me. And since raffles are often tied to a cause, my money doesn’t just disappear into a prize pool; it supports something tangible. With a fixed number of entries, I know exactly what my chances are. Even if the odds are microscopic, the prize is big enough to spark hope. Raffles typically require organizers to apply for a local permit rather than a full gaming license. This often involves legislation, interstate agreements, and ongoing compliance audits.

Lotteries and iGaming: a love that never was

Raffles usually have fixed prize pools determined by ticket sales and fundraising goals. When I want to take a shot at something huge, I’ll buy a lottery ticket and accept the long odds. One is built on scale and the dream of hitting a massive jackpot. Raffles and lotteries might look similar on the surface, but they offer completely different experiences.
This is informational only, not legal advice. Class 3 licence holders cannot offer to pay a commission to any person other than licensed promoter under the Gambling Act 2003. As a class 3 licence holder you can engage a third-party to help you to conduct gambling including issuing tickets online and managing the payment of these. If your fundraising raffle has a total retail value of all prizes (including non-cash prizes) of $5,000 or above, then you will need to apply for a class 3 licence. You must have a current Class 3 license to operate a raffle or lottery. We are honored by this recognition and remain committed to delivering the highest standards of legal service for all your tax-related needs.

Permits and Licensing

If the winnings meet or exceed the applicable reporting threshold from bingo, keno, or slot machines backup withholding of 24% applies to the amount of the winnings reduced, at the option of the payer, by the amount wagered. You may be required to withhold 24% of gambling winnings (including winnings from bingo, keno, slot machines, and poker tournaments) for federal income tax. Non-profits can hold raffles, which are a type of lottery, but large-scale lotteries are typically government-regulated.

Access your tax information with an IRS account.

While state monopolies keep control of lotteries (both traditional and instant) and lotto, keno and bingo can generally be offered by private service providers even in regulated markets, at least online. Online versions of the game also exist and are commonly offered by iGaming websites. Keno royaldogs casino was introduced to the United States in the 1800s by Chinese immigrants and has become a staple of modern casinos in the Americas and East Asia.