Sportsbooks IRS reporting question

I¡¯ve read a lot of the posts in the forum about taxes, but I was either too blind or stupid to find the answer to my question, probably both. Hopefully someone can shed some light on this as I may be worrying for nothing. Here's my situation and I¡¯m sorry that it¡¯s a book. 

In the last couple of months I've been making the drive to the great state of Nevada and placing some bets at a couple of sportsbooks. There are two Sportsbooks in the particular location to which I drive, I'll refer to them as Sportsbook A and Sportsbook B. I usually compare lines to see which book has the best number for the side / total that I want to take and I place my bet with the book that has the most beneficial number. Due to what I would consider a real oddity, I have won nearly all of the bets placed with Sportsbook A and lost most of the bets placed with Sportsbook B. All said, I'm up around $3500 between both books.
The other night while I was playing blackjack at the casino where Sportsbook A is located, I was approached by a pit boss who told me I was on the "banned list" due to transactions totaling over $10,000 in a 24-hour period. I thought this was odd, but I did place a lot of sports bets there one day a couple of weeks ago, rolling over wins into the next bet, so I figured that I must have exceeded that total. The pit boss said that I needed to provide my current ID and my Social Security Number, for which I didn't know what else to do, so I complied and gave him these items. About 20 minutes later, he brought a form back to me to have me check my info on and sign. I was a little out of it since I had a big game going on at the time, but I'm pretty sure the form was a W-9.
Here's my question... From what I have figured, I have cleared $15k or so between table games / sports bets with Casino / Sportsbook A and lost around $11k or so with Sportsbook B. I am now worried that Sportsbook A will report my winnings to the IRS and if so it will look like I'm a winner of $15k instead of the reality of being only $3500 ahead. Would Sportsbook A report these winnings to the IRS now that they have my W-9 info? Unlike Sportsbook B (except on one or two occasions,) Sportsbook A usually asks for my player's card when I place a bet, so all of my action is tracked by them.
I know that if you itemize deductions on your taxes that you can write off gambling losses up to the amount of winnings, but I don't itemize and usually take the standard deduction of $12k or whatever the figure is... So am I going to be required to pay taxes on at least $12k of the amount won with Sportsbook / Casino A since if I did itemize the losses from the other book it would only give me a net loss of $3k extra over the standard deduction? If Sportsbook A won¡¯t report the taxes, then I¡¯ll just claim my actual winnings on my taxes.
Seems RATHER unfair to have to pay taxes on around $12k when there is only around a $3500 profit! I hope that I'm just understanding the tax law incorrectly. It's difficult enough to come out ahead without paying taxes on money that you didn't actually win!

Thanks for any advice.

Some Vegas regulars can answer better than me, but here is my 2 cents

1) Why would you sign anything you don't understand? And don't remember what you signed?

2) It may not be taxes.  It may be money laundering.  I know 10,000 is the threshold for that and it sounds like they approached you when you passed this number

3) I'd go back to the casino when they aren't too busy and ask them what you signed and what the ramifications are

If it was for taxes, you should save your losing tickets and keep a diary of wins and losses.

@thorpe

Thanks a bunch for the reply. After doing a little research, I think I was indeed flagged because of the money laundering laws about the $10k barrier as you stated. That seems odd since it wasn't $10k of new money since wins were rolled into the next bets. I would usually just had the book agent my winning ticket to pay for the next bet(s). Maybe the book doesn't keep track of the new money coming in, it's just the total amount of transactions in and out totaling $10k or over that gets flagged. One week I put $3800 on the Chiefs ML to win $1000, won that and used that ticket the put $4400 on another straight bet, so maybe that counted as $13k in transactions right there even though only $3800 of new money was presented to the sportsbook? Seems like a lot of bettors would get flagged if that's how you can cross the $10k threshold.

I know after he took my ID and SSN, the pit boss told me that I needed to sign a W-9 and I'm pretty sure that's what the form said at the top.  Like I said, I had a big game going and I was playing blackjack at the time, so my memory is fuzzy about the form. I hadn't done anything wrong, so I figured it was just protocol. It was a few hours later on my drive home that I started to wonder WTF the meaning of it all was. 

I was just hoping that someone here had knowledge of what the W-9 meant and if it meant the casino / sportsbook would then report winnings. Under normal thresholds it sounds as though winnings wouldn't be reported to the IRS, but since the wins have been tracked on my player's card and total that much, maybe it's a different story? I will probably do as you said and ask the casino about this when I go back this weekend. I just hope to have some kind of answer since the end of the year is approaching quickly.

I do keep a log of wins / losses, but from what I've been told in a tax forum, you can only write off gambling losses on Schedule A of the 1040. I just usually take the standard deduction since I don't have a mortgage or enough other items to have enough deductions to itemize. That's where the law is unfair...  If a person doesn't itemize deductions then even if that person loses $100k gambling on slots or whatever and finally hits a $10k jackpot, that person wouldn't be able to write-off the losses.

I'm not sure if I would be allowed to file a Schedule C as a professional and write the losses off there since gambling isn't my main source of income. I'm guessing not.

The log of wins and losses is so you don't get taxed if you win 100K and lose 120K.  Like I said before, I don't know much about this, just giving my 2 cents 

@thorpe

Thanks again for putting your 2 cents in. It's a complicated subject (or at least this situation seems to be,) so HOPEFULLY someone with expertise will also chime in as this is something that could be helpful to a lot of gamblers.

This info is slightly complicated so I may be getting the facts wrong. I've been told by an accountant that gambling winnings should be claimed as income in the income section of the 1040 and the losses (only up to the amount of winnings) have to be written off on Schedule A (itemized deductions.) So if a Casino gives you a W2G for a win of say $10k, but you have losses of $12k, you have a net of -$2k. According to the accountant, even though you are a loser for the year, you can't just omit the $10k wins from your taxes. You a required to claim them as income, and then you (assuming you have documentation for the losses) can write off the losses on Schedule A in the "other" section.  I really hope that this accountant is wrong, or that I'm just understanding incorrectly.

This is no problem if you normally have enough expenses (or at least close to it) to file a Schedule A over just taking the standard deduction. For 2020, the standard deduction is $12400 for a single tax payer, so for someone like myself that doesn't have a mortgage and very little else to write off on a Schedule A, I can claim my losses of around $11k but that wouldn't even be as much as the standard deduction. I would have to have $12400 in other deductions to even get the benefit of writing off my losses. My losses would essentially be wiped out and thus I would be required to pay tax on the entire amount (or close to it) that is reported.

That is the main answer that I'm looking for from someone here that knows... If Sportsbook A will report the winnings or not... That W-9 is the unknown for me here as I've never had a sportsbook report winnings before.

If they won't report the winnings, then I can just claim the actual winnings and there should be no issue since I have everything documented.

If they issued you a w9 they will more than likely send it in. This would be a loss to the casino. I have been retired for a while now and have never itemized my losses when reporting.  Just claim a full loss. Have received w9s from horse racing websites and poker rooms. When I used to go to the track, I would collect tickets in the trash or on vacant tables just in case LOL. Since casino A is tracking you, they would have a record of all your action there. Their records may not be accurate because it is difficult to track all the chips you are cashing in if they are in smaller amounts. Their records then should show a loss for those cashouts. Casino B also will have a file on your action even though you did not think they were tracking you. Those accounts may be visible on your player websites. The IRS probably are not concerned about wins in the lower brackets from non-professional gamblers. But I could be wrong.

I have never talked to a accountant, probably should. Hope this helps

I hope you used your Players Card...
That Pick the Ticket out the Garbage is a Obsolete move.
Only tickets w/yr Card # apply...
The Casinos Now will give you a Printout of your Total W/L 2020.
It was not a W-9 ,imo, you filled out a >>>>

Form 8300 must be filed for each separate transaction that exceeds the $10,000 in cash limit. However, only the recipient of the funds is required to file a Form 8300 with the IRS. Any transactions that occur between a payer and the recipient in a 24-hour period are considered related transactions."

I hope this helps you......

@BIGfnPOO

@Addict101

Thanks guys for chiming in with the info. That¡¯s definitely good info about the Form 8300 and the losing tickets.

I have two losing tickets with William Hill where I didn¡¯t have  / and they didn¡¯t ask for a player¡¯s card, so I guess those won¡¯t count for losses.  That sucks since those are two of my biggest losses totaling $7200. I didn¡¯t realize the tickets weren¡¯t acceptable for write-offs anymore or else I would¡¯ve definitely used my player¡¯s card. I signed up for the app since those losses, so all of that action is obviously tracked.

I was aware that the casinos provide the year-end W/L summaries of player¡¯s card accounts, but is there a certain threshold of winnings that needs to be hit before they report the winnings to the IRS? Or do they now just send all reports to the IRS?
I know shit is always changing.

They are required by KYC (know your customer) to collect your SS# if you hit certain cash thresholds.

This is called a FINCEN report (google it).  It has nothing to do with taxes.  It is when you have 10k in cash transactions in a 24 hour period at any business.  If you paid for a car in cash, you would get the same requirement.  It is not an IRS form.  It is a cash tracking form.  Yours will go on a stack of millions of them or in some database.  Every time you have more than 10k in cash, they will file a new FINCEN.  If you had hundreds of these things, someone MIGHT get interested but even then probably not.

You have 1.  Forget about it.  It is a nothing.

You are required by the tax code to report any gambling winnings on your taxes.  But you giving them the W9 has zero to do with taxes.  The casino and sportsbook do not file a tax form for you.  You would have to be audited and then asked about it, and possibly then you would have to pay taxes on the 3500.  The amount in question is almost a joke.  Just look around a casino at any time of day on any day.  There are 100 people betting more than you.

Enjoy your holidays.

PS...  The casino is not allowed to tell you about the FINCEN / W9 thing.  I really think this is absurd because it sends fear in to everyone who gets asked for it.  If they were allowed to explain it to their customers, it would be so much better for everyone.

To continue the logic....

The reason that casinos don't file income reports with the IRS is because a casino cant give you an income statement.  They have no idea if you took that money you won at the SB and put it in a slot machine, or as you did lost it at the casino next door.  It is required by the tax code that you keep records and self report.

If you won 10k at one casino one day, and lost 10k in another state another day, and did this dozens of times - the IRS isn't keeping track of all of that for you.  The US Tax Code is an honor system in most cases.  It is up to the tax payer to self report, and the IRS to question it when they deem appropriate (and profitable for them).

GL - and sleep like a baby.

@vanzack

Man, thanks so much for that info! That definitely puts my mind more at ease on the situation. I felt like some kind of criminal or something when the pit boss approached me and told me I was on the "banned list." The blackjack dealer even looked on curiously and with surprise, like he had never seen that before.

I've definitely heard about the $10k rule about buying cars, etc., but it seems like they clearly figure the $10k a little differently at a sportsbook. I thought the $10k had to be new money. I'm a peon like you said compared to many other people. I definitely never put $10k of new money into action at any one time (or even within 24 hours for that matter,) so I was very shocked that they said I had hit that threshold. They must count using a winning ticket to pay for the next bet like two different cash transactions even though money never exchanged hands. Figuring things the way that it appears that they do, someone could bet a dime of new money on a game, win and roll that ticket into another bet, win the second bet and hit that $10k threshold when that second ticket is cashed or used to place another bet. Seems like that's not how the law / rule was intended if they're trying to catch illegal activities etc. but whatever.

I know that sports betting / most gambling winnings are on the honor system to be reported, but in situations where the casino DOES report winnings (like with big slot or keno jackpots on W2-Gs,) if those winnings are not shown on your tax return in some way, then you will most likely hear from the IRS as to why you didn't claim those winnings. The way it was told to me is it's like if you worked for a company, received a W-2, but didn't claim that income on your taxes, you would most likely hear from the IRS.

It seems only logical if you had more losses than winnings for the year that you wouldn't have to report that jackpot, but the IRS requires you to report the jackpot and then write your losses off on Schedule A as I described in the previous post. That's where some gamblers could get into trouble and may have to pay taxes on a jackpot when they were actually losers for the year. At least if I'm understanding the tax law correctly as told to me by an accountant.

I'm horrible at getting to the point / question, but that's why I was wondering if / when sportsbooks report winnings, if at all.

Thanks again everyone for the info and please correct me if I'm understanding anything incorrectly.

I am a self-employed, small business owner, and although I shouldn't be at risk of anything if I was to get audited for some reason, it's still not something that sounds very fun to have to deal with.  I wouldn't want to get audited because of something to do with some sports bets.

You are correct on all counts.

A 1099G is like a W2 or 1099.  You must report it or it is likely an insta-audit.  Why?  Because it shows INCOME and because it is very easy to find these people.  It shows that you MADE PROFIT IN THAT SINGLE TRANSACTION either by working or by another means.  So if you got a 1099G and didnt report it - you would likely be audited.

But sports betting is not reportable.  It is a self reporting mechanism.  YOU are required to report.

Sounds like you understand it totally correct.  The bottom line is that what that casino manager asked you to fill out that day did not change, or have any impact whatsoever on your tax situation.  Before  that moment you were required to self report, and after that moment were required to self report.  The form you filled out was not for taxes.  

@vanzack

Thanks again for taking the time and energy to clarify everything. I have no problem with the self-reporting part and I'm really relieved that the W-9 (or whatever it was) didn't change things in my case. It seems like the logical way to do things, subtract losses from winnings, and just claim the net amount won, but the tax laws aren't always logical.

A W2-G would change how I would have to report it / write it off on my taxes and that's why I was so concerned about possibly getting one from Sportsbook A. As laid out in a previous post, I would get screwed if I have to use Schedule A to write off the losses against winnings.

I really wonder how many people get screwed each year on their taxes from hitting one jackpot and receiving a W2-G when they don't normally have enough deductions to itemize. 

A W-9 form is only an IRS form that asks a subject to provide his SS#. Casino Boss A was keeping his eye on you because he is required to report any time a player plays an amount in excess of 10K cash,as per The Banking Act of 1990,either all at once or several instances that add up to 10K.This is strictly a money laundering/drug money etc. action that is reported to the IRS to be able to track cash exchanges.This has NOTHING to do with income or winning/losing bets.On the form that Casino Boss submitted it mades no note of if you won/lost and how much so IRS has no idea if you even won $.A W-2G is aform that is required when a bet pays 300-1 or greater and the bet may have some witholding and this is reported to IRS as income.This is the type of payoff that can be off=set by losses up to the amount of the pay-off.This payoff is rare in sports but would come in to play with slot jackpots and more common in Horse Racing with Trifectas,etc.

You aren't banned and IRS doesn't know sh*t about your play.

So, I didn't read this whole thing, but I had a similar situation at one point, I think.  Over a decade ago, I won two poker tournaments and cleared $100,000 after taxes.  One was an internet poker tournament and the other was at the Bellagio in Atlantic City.  I wrote a check to the government for $45,000 that year.  I did not cheat taxes at all.  And I probably could've because one of the tournaments was with FullTilt back when internet poker was allowed.  (Thanks Republicans for legislating morality and taking food off my table.)  In any case, I just itemized.  I included my sports gambling losses that I kept on an excel spreadsheet and all of my poker buy-ins that I printed off from the internet sites.  I got audited, sent all this info in, and then they left me alone.  Itemizing instead of not taking the standard deduction isn't a big deal.  It's just easier to take the standard deduction....

@HoundsBlood

 And I can't remember if I was 100% accurate on the excel sports sheet.  I'm sure it was at least close....    (I was able to use an excel sheet because it was with my local btw)

There are many different IRS filing forms for the many different types of gambling.  For instance winning a slot machine jackpot is different than winning a sweepstakes.  Your Casino A giving you a W9 instead of a standard W2G for instance makes them look cheap, cheap, cheap.  It's very similar to giving you a 1099 and saying YOU were responsible for winning rather than THEM being responsible for supplying the winnings. 

In any event there is NO WAY around filing a long form itemized tax return and claiming gambling losses to offset that W9.

When they gave me $60,000 in cash money at the Bellagio, I didn't ever get shit. No IRS forms.  Nothing...  Zero....  Just the cash.  Which I was barely able to stuff in my pockets and sweated the whole walk to the car because people had been robbed the week before in the car garage.

@HoundsBlood

 In 2018 my casino host invited me to attend a Blackjack Tournament.  Long story short, I made the final table.  Six of us agreed to split the winnings if any of us won.  Seventh player would not join us.  Don't know what his problem was, house shill, just an idiot, it doesn't matter.  We won.  Took my $40K in cash at the cage and was not required to sign anything  Did not receive any forms either.  Needless to say I beat feet back to the car with my crew ASAP.