Can You Write Off Gambling Losses?

The Legality and Implications of Writing Off Losses from Gambling

Can you write off gambling losses legally? Gambling winnings are mainly treated as taxable income, and you can deduct gambling losses on federal returns.

But frequent gambling losses are more than just adjusted gross income on your income tax return. If concerns about gambling loss deductions are impacting your life or finances, it’s likely time to reach out for help.

Icarus Nevada’s Las Vegas location has given us a front row seat, where we’ve seen the casinos take the vast majority of the wins.

At the same time, casual gamblers deal with mounting debt, destroyed relationships, and a gambling addiction. Whether you bet on horse racing, card games, or roulette, the IRS requires strict reporting by casinos to ensure compliance with tax code.

Keep reading to learn how to report gambling winnings and losses on your tax return and how to get help if gambling has turned into your worst nightmare.

Gambling Winnings and Losses Impact Your Annual Federal Return

Gambling has definite tax implications in the tax year in which the earnings or losses occurred.

Before we dig into the topic of reporting gambling winnings, let’s start by pointing out that we are a mental health facility. The information we share provides you with general guidance on reporting gambling wins and losses on your federal and state income taxes.

A tax attorney or accountant is the best person to answer questions on how to fill out your tax return, report gambling winnings or other taxable income, and deduct your losses without issue.

Reporting Gambling Income to the IRS

When you come to Las Vegas and win at the slot machines or in a poker tournament, the winnings must be reported to the Internal Revenue Service as taxable income. You won’t get away with not reporting it.

Casinos are required under federal law to issue a Form W-2G for most winnings. Even if you don’t receive one, you are still mandated by law to report gambling winnings on your return (file a Schedule A). If you don’t, you open yourself up to an audit and penalties.

You Can Deduct Gambling Losses Deductions

Similarly, you can report gambling losses as itemized deductions on your federal tax return, deducting them on Schedule A. You can only claim losses up to the reported earnings. For instance, a casual gambler visits Las Vegas and wins $3,000, then loses it. He can only report losses up to $3,000. Losses may not exceed the earnings. You cannot deduct losses if you take the standard deduction.

It’s also worth noting that laws regarding taxes and deductions on casual gambling winnings are set to change in 2026, with a cap of 90% of losses eligible as deductions. That would make that same $3,000 of itemized deductions in our example only worth $2,700 starting in that tax year.

Professional Gamblers Deduct Losses and Winnings Under Schedule C

High-stakes poker players and other professional gamblers are very different from the Las Vegas resident or tourist who dabbles in occasional recreational gambling.

Those who earn a living as gamblers are treated as small business owners and must report both winnings and losses on Schedule C, profit or loss from a business. The IRS also expects them to pay self-employment tax on this money.

Records Needed to Claim Itemized Deductions

The IRS expects anyone with gambling winnings and losses to keep detailed records and statements.

Documentation includes betting slips or receipts, casino records or statements, and credit card receipts. For recreational gamblers, travel expenses are not valid loss deductions; they may be tax deductible for professionals under IRS rules.

Changing Laws Regarding Tax Deductions for Gambling in the Big Beautiful Bill

It is worth noting that the “Big Beautiful Bill” (signed into law on July 4, 2025) includes a provision that maximizes gambling loss deductions at 90%. In many cases, this is likely to create a scenario where bettors owe taxes on income they never actually earned, an occurence critical gamblers are calling “phantom income.”

This change could significantly affect savvy amateur gamblers as well as pros, and those who itemize losses for for tax deduction purposes.

Gambling Wins and Nevada State Tax Returns

Nevada does not impose state taxation, including on gambling. However, those who live outside of Nevada and win big at one of the state’s casinos may owe taxes in their home states.

If you are unsure if you should pay taxes – or if you can claim deductions for losses – check with a tax advisor in your state of residence. That’s who can best guide you on how to include your W-2G on your state tax return to avoid errors as you deduct your losses.

What Causes Casual Gamblers to Turn into Addicts?

Many turn to playing games of chance as a lively form of entertainment. But it doesn’t take long before the thrill of winning can turn into compulsive gambling. Here are some reasons recreational gambling can turn into a raging addiction:

Gambling Provides an Illusion of Control or Skill

Some who gamble believe they can influence outcomes in these games of chance. It’s a cognitive distortion causing gamblers to overestimate the odds of winning or keep them at the table longer. Games like poker or sports betting, which do have some element of skill, make other games feel more legitimate.

Casinos Can Be an Escape from Trauma and Stress

The casino can be a temporary escape from anxiety, trauma, stress, or depression. The atmosphere is exciting and can distract you from emotional pain. In addition, it becomes an unhealthy coping tool that can help people avoid the reality of very real mental health issues.

Chasing Losses (Trying to Win Back Money)

Chasing losses refers to continuing to gamble to win back gambling losses. The behavior spirals once the person maxes out their credit cards, drains the bank account, or fails to pay on loans. The pressure to break even and recoup perceived lost winnings starts to override logic.

Icarus Nevada Treats Gambling Losses Effectively

Icarus is a Joint Commission-accredited treatment facility with experience in helping individuals stop chasing big winnings and return to firmer footing after experiencing gambling losses. We provide customized treatment programs to address the psychological drivers that compel gambling behaviors.

Our team will work with individuals and families impacted by the financial strain of gambling losses, restoring trust and communication skills to help you move forward. We’ll also help you replace gambling, an inappropriate coping tool, with healthy new ways to handle life’s daily stressors.

Call Us Today to Break the Cycle of Chasing Gambling Losses

If you’re trying to understand how to deduct your gambling losses and pull out of a gambling-induced financial tailspin, the first step is simple. Stop gambling.

We know that it’s easier said than done, but the experienced team at Icarus Nevada will be at your side as you confront the fallout of your gambling losses and broken relationships. We’ll support you while you confront the reason for your compulsive gambling and help you regain a more peaceful mindset.

Call our admissions team today to learn more about how our individualized gambling addiction treatment plans can help.