It appears that the tax situation in the U.S. is extremely disadvantageous for sports betting. Total winnings (not net) are taxed as income and losses can only be deducted if you itemize.
For example, if you win $800 and then lose $1000, you are stuck paying taxes on $800, even though you have no net profit (if you don’t itemize your deduction). The tax rate for gambling winnings appears to be 24%, though I’m not sure if this is correct. So for people who are trying the approach “bet $1000 on something very unlikely… if you lose, bet the $1000 of site credit on something extremely likely”, keep in mind that the modal outcome using this strategy is a loss of ~$240 when you consider taxes.
Great point Kasey, and the tax rate for gambling winnings is actually just your marginal tax rate, but sportsbooks will withhold 24% for people who win 30x their stake on a given bet. This is a good resource for taxes in sports betting.
It appears that the tax situation in the U.S. is extremely disadvantageous for sports betting. Total winnings (not net) are taxed as income and losses can only be deducted if you itemize.
For example, if you win $800 and then lose $1000, you are stuck paying taxes on $800, even though you have no net profit (if you don’t itemize your deduction). The tax rate for gambling winnings appears to be 24%, though I’m not sure if this is correct. So for people who are trying the approach “bet $1000 on something very unlikely… if you lose, bet the $1000 of site credit on something extremely likely”, keep in mind that the modal outcome using this strategy is a loss of ~$240 when you consider taxes.
Great point Kasey, and the tax rate for gambling winnings is actually just your marginal tax rate, but sportsbooks will withhold 24% for people who win 30x their stake on a given bet. This is a good resource for taxes in sports betting.