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Sports Betting Laws & Tax in United States

Is sports betting legal in United States? What tax do you pay on winnings? Who regulates the market? Here is everything you need to know about the legal framework for sports betting in United States as of 2026.

Regulatory Framework

Regulator State gaming authorities (varies by state — e.g. New Jersey DGE, Pennsylvania PGCB)
Legal Since 2018
Minimum Age 21+
Winnings Tax 24% federal withholding on winnings over $5,000; state taxes vary

Sports betting was federally legalised by the Supreme Court's PASPA ruling in May 2018. Each state decides independently whether to legalise and regulate. As of 2024, 38+ states and DC have legalised sports betting. The largest markets are New Jersey, New York, Pennsylvania, Ohio and Colorado.

Tax on Betting Winnings in United States

Tax applies: 24% federal withholding on winnings over $5,000; state taxes vary

All gambling winnings are taxable federal income in the US. For winnings over $5,000 (net of wager), operators withhold 24% for federal tax. You must report ALL gambling winnings on Form 1040 (Schedule 1) regardless of amount. State income tax on winnings varies by state (0% to 10%+). You can deduct gambling losses up to the amount of winnings if you itemise deductions.

Bonus & Promotion Rules

Each state sets its own rules. Most allow welcome bonuses but require clear disclosure of playthrough requirements. Some states (e.g. New York) have proposed restricting promotional deductions for operators.

Editor's Perspective

James Calloway — Updated 2026

The US market is the largest in the world by revenue but also the most operator-saturated. DraftKings, FanDuel and BetMGM command over 75% of market share nationally. Bet365 has been growing aggressively but remains a distant fourth. Odds quality in the US trails European markets because the standard is American moneyline formatting and a culture less focused on overround comparison — but sharp bettors can find value in player-prop markets where liquidity is thin.

Peak betting periods: Super Bowl (February), March Madness (March), NBA Finals (June), MLB World Series (October).

Frequently Asked Questions

Is sports betting legal in my US state?

It depends on your state. As of 2024, 38+ states have legal sports betting. Check your state gaming authority — major legal states include NJ, NY, PA, OH, CO, IL, TN, VA, MI.

Do I have to pay tax on sports betting winnings in the US?

Yes. All gambling winnings are federally taxable income. Winnings over $5,000 trigger 24% automatic withholding. Report all winnings on Form 1040. Keep records of losses as they may be deductible if you itemise.

Why is the minimum age 21 for sports betting in the US?

Most US states require bettors to be at least 21, aligning with the minimum age for casino gambling under state law. A few states (Wyoming, Kansas) allow betting at 18.

This page is for informational purposes only and does not constitute legal or tax advice. Laws change — consult a qualified local advisor for personal guidance. Last reviewed: 2026.