Sure, when you itemize you can write off losses against wins across sportsbooks, meaning that you’re taxes on the net profit you make across all bets. When you take the standard deduction you can only write off losses against wins within a sportsbook. So if you won $10,000 on Fanduel and lost $8,500 on all the other sportsbooks, you’d be taxed on $1,500 of income if you itemize and on $10,000 of income if you take the standard deduction.
Say you lose $5,000 on Fanduel and gain $6,000 on DraftKings. If you take the standard deduction, your pay taxes on the $6,000 gain but can’t write off the $5,000 loss. If you instead itemize, you can put the $5,000 loss as a deduction, in effect paying taxes on a $1,000 gain. This makes a big difference even at moderate tax rates.
Thanks for pointing this out. Can you clarify why the EV is so much lower when taking the standard deduction?
Sure, when you itemize you can write off losses against wins across sportsbooks, meaning that you’re taxes on the net profit you make across all bets. When you take the standard deduction you can only write off losses against wins within a sportsbook. So if you won $10,000 on Fanduel and lost $8,500 on all the other sportsbooks, you’d be taxed on $1,500 of income if you itemize and on $10,000 of income if you take the standard deduction.
Say you lose $5,000 on Fanduel and gain $6,000 on DraftKings. If you take the standard deduction, your pay taxes on the $6,000 gain but can’t write off the $5,000 loss. If you instead itemize, you can put the $5,000 loss as a deduction, in effect paying taxes on a $1,000 gain. This makes a big difference even at moderate tax rates.