Yes, you have to pay taxes on sports betting winnings even if you don’t withdraw them. The IRS treats a winning bet as income the moment it settles and the money is credited to your sportsbook account, whether you cash it out, re-wager it, or let it sit for years. Leaving the balance in the app doesn’t delay the tax, reduce it, or hide it.
The Rule That Controls This: Constructive Receipt
The reason withdrawal doesn’t matter is a tax concept called constructive receipt. Under Treasury Regulation 1.451-2, income counts as received in the tax year it is credited to your account or otherwise made available to you, even if you never actually take the money out.1GovInfo. 26 CFR 1.451-2 Constructive Receipt of Income The IRS’s standard example is a bonus check available in December that an employee asks to be held until January. It’s still December income, because the funds were available in December.
Your sportsbook balance works the same way. Once a winning bet settles and you can see the credited funds, you could withdraw, re-wager, or do nothing. All three choices are equivalent for tax purposes, because the money was available to you without any real restriction. The only thing that would change the analysis is a mandatory lockup or holding period that genuinely prevents access, and standard U.S. sportsbook accounts don’t impose anything like that.
Which Tax Year the Winnings Belong To
Your tax obligation attaches to the calendar year your bets settle, not the year you move money to a bank. Win $4,000 in December 2026 and withdraw it in February 2027, and every dollar of that win belongs on your 2026 return. The timing of the bank transfer is irrelevant.
This also means you can’t shift income between years by sitting on a balance. If you’re hoping to push a big December win into next year’s return by delaying withdrawal, it doesn’t work. The settlement date is what the IRS cares about.
What Actually Counts as a “Winning”
You report the profit from each winning bet, not the total payout. A $100 bet that returns $350 produces $250 in taxable winnings. The IRS defines proceeds the same way for withholding: amount received minus amount wagered.2Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
What trips people up is that you cannot cancel out losing bets against winning bets on the income side of your return. If you had $8,000 in winning bets and $6,000 in losing bets over the year, you report $8,000 as income. The losses live on an entirely separate part of the return, and whether they help you is a different question (covered below). So a bettor who finishes the year roughly even can still owe real tax, and the balance still sitting in the app is not shielding any of it.
Will the Sportsbook Report It?
Sometimes, but reporting and tax liability are two different things. Starting with the 2026 tax year, sportsbooks file a Form W-2G when a single winning bet produces profit of at least $2,000 and the payout is at least 300 times the wager.3Internal Revenue Service. Instructions for Forms W-2G and 5754 The $2,000 threshold replaces the old $600 figure and will adjust for inflation each year.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Most ordinary sports bets won’t meet the 300-to-1 ratio, so most bettors never see a W-2G at all.
That silence doesn’t let you off the hook. You still owe taxes on every dollar of winnings whether or not the sportsbook sends a form, and whether or not the funds leave the app.5Internal Revenue Service. Topic No. 419 – Gambling Income and Losses When a single win exceeds $5,000 in profit and clears the 300-to-1 ratio, the sportsbook also has to withhold 24% for federal income tax before crediting your account.2Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source That withholding is a prepayment, not a settlement; your actual rate could be higher or lower, and you reconcile when you file.
How to Report Winnings You Haven’t Withdrawn
All gambling winnings go on Schedule 1 (Form 1040) as other income, with or without a W-2G.5Internal Revenue Service. Topic No. 419 – Gambling Income and Losses The total flows into your Form 1040 and becomes part of your adjusted gross income. Any amounts the sportsbook withheld are credited against your total tax liability on the 1040, the same way employer withholding is.
To find your number, pull an annual account statement or transaction history from each sportsbook you used during the year. You can download these from the app or request them through customer support. If you played across several platforms, you need statements from all of them; the IRS wants one total on one return, regardless of how many wallets the money is scattered across.
Paying Tax When Nothing Was Withheld
Because most sports betting wins don’t trigger withholding, you can finish a profitable year with a tax bill and no money set aside for it. The IRS expects quarterly estimated tax payments if you expect to owe $1,000 or more after subtracting withholding and refundable credits, and Topic 419 specifically flags gambling winners as people who may need to make them.6Internal Revenue Service. Estimated Taxes5Internal Revenue Service. Topic No. 419 – Gambling Income and Losses
Skip the payments and underpay by more than $1,000 at filing time, and the IRS charges an underpayment penalty. The safe harbors are paying at least 90% of your current-year tax liability through the year, or 100% of your prior-year liability (110% if your prior-year AGI was above $150,000). Estimated payments use Form 1040-ES, with due dates in April, June, September, and the following January. A balance sitting in your sportsbook account does not count as a payment to the IRS, even if you fully intend to withdraw it before the bill is due.
What About Deducting Losses?
Losses can offset winnings on your return, but only loosely, and only for some people. You can deduct gambling losses only if you itemize on Schedule A instead of taking the standard deduction.5Internal Revenue Service. Topic No. 419 – Gambling Income and Losses Starting in 2026, you can deduct only 90% of your losses, not the full amount, and the deduction is still capped at your total gambling winnings for the year.7Office of the Law Revision Counsel. 26 USC 165 – Losses Unused losses don’t carry forward to future years.
The practical effect: a bettor who won $10,000 and lost $10,000 can deduct at most $9,000, leaving $1,000 of taxable income on a break-even year. And the 2026 standard deduction is $16,100 for single filers and $32,200 for joint filers,4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 so unless your total itemized deductions clear that figure, the loss deduction delivers nothing. None of this changes based on whether you withdrew your winnings.
State Tax Doesn’t Care Either
Most states with an income tax start from your federal AGI, which already includes your gross gambling winnings. Some of those states let you deduct losses the way the federal government does (now subject to the 90% cap); others allow no loss deduction at all. In a state that disallows losses, a bettor who won $10,000 and lost $10,000 owes state tax on the full $10,000, even on a break-even year. States with no income tax impose no state liability. Rates and rules vary; check your state’s tax forms for the specifics. In every case, the trigger is the winning bet settling, not the money leaving the app.