Yes, DraftKings does report certain winnings to the IRS, but only when they cross specific dollar thresholds, and those thresholds depend on whether you play daily fantasy sports or place sports bets. For daily fantasy, the trigger is $600 in net earnings for the year, reported on Form 1099-MISC. For sports betting in 2026, DraftKings files a Form W-2G when a single wager pays at least 300 times what you bet and the net winnings are $2,000 or more, up from the old $600 threshold.1Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026) Below those lines, no form goes to the IRS. You still owe tax on every dollar.
The DFS Reporting Threshold
Daily fantasy contests are treated as prize payments rather than wagering transactions. If your net DFS earnings for the calendar year exceed $600, DraftKings issues you a Form 1099-MISC and sends a copy to the IRS.2DraftKings. 1099-MISC Reporting Thresholds for DraftKings Daily Fantasy Sports and Pick6 Winnings Net earnings means total payouts minus entry fees for the year. There is no 300x multiplier here. Finish the year at $599 in net DFS profit and no 1099 goes out, though that income is still taxable.
The Sports Betting Threshold
Sports bets follow a two-part test. DraftKings must file a W-2G when a single wager’s payout is at least 300 times the amount wagered and the net winnings meet the reporting threshold, which is $2,000 for 2026.1Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026) Both conditions have to apply to the same bet. In practice the 300x multiplier is the tougher hurdle. A $10 bet would need to pay at least $3,000; a $50 bet, $15,000. Straight bets at standard lines almost never generate a W-2G. Long-shot parlays and heavy underdog wagers are where this comes up.
When DraftKings Withholds Tax
Reporting a win and withholding tax on it are two different steps, and withholding has a higher bar. DraftKings must withhold 24% of your net winnings when the payout exceeds $5,000 after subtracting your wager and the winnings are at least 300 times the amount wagered.1Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026) That amount shows up in Box 4 of your W-2G and counts as a tax payment on your return, similar to paycheck withholding.
If DraftKings reports your winnings on a W-2G but you never provided a valid Social Security number or taxpayer ID, backup withholding kicks in at the same 24% rate.3Internal Revenue Service. Instructions for Forms W-2G and 5754 Confirm your SSN is on file in your account before any big win.
You Owe Tax Even When Nothing Is Reported
This is where people get tripped up. The IRS requires you to report every dollar of gambling income on your tax return, whether or not DraftKings sent you a form.4Internal Revenue Service. Topic No. 419, Gambling Income and Losses A $400 DFS profit that stayed under the 1099-MISC line is still taxable. A $1,800 sports bet payout that fell short of the W-2G threshold is still taxable. Gambling winnings go on Schedule 1 of Form 1040.
The absence of a form does not mean the IRS can’t find out. Payment processors, bank deposits, and audit trails all exist. Treating unreported wins as invisible money is how people end up with accuracy-related penalties.
Deducting Losses Against Winnings
You can offset gambling winnings with gambling losses, but only if you itemize deductions on Schedule A, and never more than the winnings you reported.4Internal Revenue Service. Topic No. 419, Gambling Income and Losses Won $3,000 and lost $5,000? Your maximum deduction is $3,000.
You cannot net wins and losses and just report the difference. The full winnings go on Schedule 1 as income; the losses go separately on Schedule A.5Internal Revenue Service. Publication 529 (12/2020), Miscellaneous Deductions That matters because the winnings raise your adjusted gross income, which can affect eligibility for other credits and deductions even when the losses zero out the tax on paper.
Itemizing only helps when your total itemized deductions clear the standard deduction, which for 2026 is $16,100 for single filers and $32,200 for married couples filing jointly.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 If gambling losses plus mortgage interest, state taxes, and charitable giving don’t clear that bar, you pay tax on the full winnings with no offset. Most recreational bettors land here.
Records That Hold Up
DraftKings provides a win/loss statement in your account. It’s a starting point, not the whole record. The IRS expects a gambling diary listing the date and type of each wager, the name and location of the gambling establishment, and the amounts won or lost.7Internal Revenue Service. Diary or Similar Record
Supporting documentation makes the diary credible: wagering tickets, canceled checks, bank withdrawal records, credit records, and payment slips.7Internal Revenue Service. Diary or Similar Record For online play through DraftKings, your transaction history and bank statements do this work. Download and save them each year rather than assuming they’ll always be there in the app.
State Taxes and Estimated Payments
Federal isn’t the whole picture. Most states with an income tax treat gambling winnings as ordinary income at your bracket. States with no income tax won’t touch them. If you placed a bet while physically located in a state other than where you live, you may owe tax to both, though your home state will generally credit taxes paid to the other. Rules vary; check your state’s department of revenue for specifics. A 24% federal withholding on a big win does not cover your state’s share.
Because most bets never trigger federal withholding, a big winning year can leave you exposed to an underpayment penalty. You can generally avoid it if you owe less than $1,000 after withholding and credits, or if you’ve paid at least 90% of your current-year tax or 100% of your prior-year tax through withholding and estimated payments.8Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax If your gambling income is significant and comes in bursts, make a quarterly estimated payment after a big win using Form 1040-ES.
What Happens If You Skip It
When DraftKings files a W-2G or 1099-MISC and the matching income doesn’t show up on your return, the IRS matching system flags the gap. Even without a form, if an audit surfaces unreported gambling income, the accuracy-related penalty for negligence is 20% of the underpaid tax.9Internal Revenue Service. Accuracy-Related Penalty That sits on top of the tax owed plus interest.
The IRS specifically lists “not including income on your tax return that was shown on an information return” as an example of negligence.9Internal Revenue Service. Accuracy-Related Penalty Intentional fraud carries steeper penalties. Since winnings below the reporting thresholds are easy to lose track of, keeping your own records through the year is the reliable way to avoid a bad April.