DEFINITION of 'Gambling Income'

Gambling income is any income that is the result of games of chance or wagers on events with uncertain outcomes (gambling). This income fully taxable and must be reported on an individual’s federal tax return.

BREAKING DOWN 'Gambling Income'

Gambling income includes any money earned from gambling, whether it be winnings from casinos, lotteries, raffles, and horse and dog races, bingo, Keno, betting pools or sweepstakes. Gambling income also includes cash and the fair market value of non-cash prizes like cars or trips. The payer of the winnings (for example, a casino) may give the winner a W-2G form and also send a copy to the IRS.

Even if the winner does not receive a form W-2G from the payer, he or she must still report all gambling income. The full amount of the income earned gambling less the cost of the bet must be included on a person’s federal tax return. Gambling losses, or losing bets, can also be reported on a federal tax return. For shared gambling income (winnings shared by two or more people), the casino or payer divides the winnings among the payers and reports the winnings to the IRS for each winner.

Professional Gambling

Professional gamblers are those that gamble on a full-time basis and earn enough to pay their living expenses such as house payments or rent, utilities and insurance, among other necessities. Some individuals earn income from part-time gambling. Professional gamblers report their gambling income as self-employed income, which is subject to federal income tax, self-employment tax and state income tax.

The most common games that offer professional gamblers long-term profits include blackjack (usually by counting cards, which is discouraged by casinos), daily fantasy sports (DFS), poker, sports betting and video poker. Truly professional gamblers will use only legal and legitimate betting systems to maximize their winnings and minimize their losses in order to make a profit.

  1. Gambling Loss

    A gambling loss is a loss resulting from games of chance or wagers ...
  2. Annualized Income

    Annualized income is an estimate of the amount of money that ...
  3. State Income Tax

    State income tax is a tax by a state on the income of its residents ...
  4. Taxable Income

    Taxable income is the amount on which the tax an individual or ...
  5. Pari-Mutuel Revenues

    Pari-mutuel revenues is income a gaming company earns from customers' ...
  6. Speculator

    A speculator utilizes strategies and typically a shorter time ...
Related Articles
  1. Financial Advisor

    Why Procter & Gamble Stock is Finally a 'Buy' (PG)

    Understand what has caused problems for Procter & Gamble over the past few years and what the company is doing about it. Learn if its stock is a buy.
  2. Investing

    Procter & Gamble Trades Ex-Dividend Wednesday

    Procter & Gamble will send its dividend payment on May 15 to shareholders of record as of April 21.
  3. Investing

    Procter & Gamble Earnings on Tap: What to Expect

    Wall Street expects the consumer products giant to post an increase in earnings per share on slightly lower sales.
  4. Investing

    Will Procter & Gamble's Restructuring Pay Off?

    Procter & Gamble has whittled down its brand portfolio from 160 to 65. Will this strategy pay off?
  5. Investing

    Casino Stats: Why Gamblers Rarely Win

    Gambling is never a reliable source of supplementary income. Read on to find out why.
  6. Small Business

    Three Companies That Will Benefit From Online Gaming

    Certain companies stand to benefit from the increasing popularity of the online gambling industry in the U.S., as well as its expanding legalization.
  7. Investing

    Procter & Gamble: Getting Back to Basics (PG)

    From aggressive expansion to a renewed focus. How will this impact investors?
  8. Investing

    4 Gambling Stocks that Outperformed Since 2010 (CHDN, MPEL)

    A look at four stocks in the casino and gambling industry that outperformed the market for the last five years.
  9. Insurance

    Procter & Gamble Hikes Dividend, Nears 52-Week High (PG)

    The company expects to distribute $7.5 billion to shareholders, making Procter & Gamble a solid investment as it raises more cash from divestments.
  10. Investing

    Procter & Gamble Notches Slight Q2 Beats

    Procter & Gamble (NYSE: PG) saw a modest rise in adjusted net income for its most recently completed quarter, on the back of essentially flat revenue growth. On Friday, the company reported ...
  1. What is the difference between speculation and gambling?

    Learn about speculation and gambling, examples of speculation and gambling, and the main difference between a speculator ... Read Answer >>
  2. What is the difference between taxable income and gross income?

    Learn the basic differences between the terms gross income and taxable income, and what is included in the total of each ... Read Answer >>
Trading Center