Can someone Help me understand how sports betting winnings are taxed?
This year I made some sports bets on the Draft Kings App and so far I’ve:
Deposited: $5,000
Withdrawn: $6,000
Won: $11,000
Spent: $10,000
I’d for example deposit and wager $100 and then win back $150 total. Then I’d take that $50 of “profit” and use it to make more bets, winning some and losing some. All in all the initial deposit of $100 might result in 80$ in profit at the end of the day at $180 total. This would be over the course of making maybe 10 different bets with some “wins” reaching as high as $250 for example. This is why my “Spent” is recorded as higher than what I’ve deposited.
Come tax time in 2027, I’m seeing that basically I’d need to pay taxes on the full $11,000 in recorded wins even though I only profited $1,000 and deposited $5,000. I’ve used some online calculators and see that this would result in a tax bill of around $3,500. This is way beyond what I’ve technically profited.
My standard deduction is about $16k and job income is $75k. My recorded bets that counted as money that was wagered and lost totals about $2,000.
From what I’m understanding, I’d need to completely forfeit my standard deduction to itemize any of my losses to offset the $11,000 in wins, which doing the math is not worth it for me.
Can anyone confirm if I’m understanding this the right way? Am I screwed and need to plan to set aside $3.5k for tax season in 2027?
**Edit for additional information: I live in Oregon