Federal Excise Tax on Wagering and Gambling: Rates, Forms, and Filing

The federal excise tax on wagering is a two-part charge the IRS collects from anyone in the business of accepting bets: a percentage tax on every wager taken (0.25% if the wager is authorized under state law, 2% if it isn’t) plus a flat annual occupational tax of $50 or $500.¹² Operators report the per-wager tax monthly on Form 730 and pay the occupational tax and register their business on Form 11-C. The federal tax applies whether or not the state permits the activity, and it sits on top of any state or local gambling taxes owed.³

What Gets Taxed and What Doesn’t

The statute reaches a narrower slice of gambling than most people assume. A “wager” for federal excise purposes means one of three things: a bet on a sports event or contest placed with someone in the business of accepting them, a wager placed in a for-profit wagering pool tied to a sports event or contest, or a wager placed in a lottery conducted for profit.⁴

Sportsbooks, bookmakers, numbers operators, and for-profit lottery operators fall inside that definition. Online and mobile sportsbooks do too; the tax follows the wager, not the platform, so a state-licensed app pays the same 0.25% a physical bookmaker does.³

Casino table games are outside the scope entirely. Blackjack, roulette, craps, and most casino poker games aren’t bets on a sports event, aren’t wagering pools, and aren’t lotteries, so the federal wagering excise tax does not apply to them.

Several activities that would otherwise qualify are specifically exempt:

Parimutuel wagering licensed under state law, including horse and greyhound racing.⁵
Coin-operated gaming devices, including slot machines, crane machines, and pinball machines that pay prizes or cash.⁶
Sweepstakes, wagering pools, and lotteries conducted by a state agency, when the wager is placed directly with the agency or its authorized employees.⁵
Gaming conducted by a properly operated 501(c)(3) charity, as long as no proceeds benefit private individuals. Other exempt organizations may still owe the tax when proceeds reach insiders.⁷

The Two Rates: 0.25% and 2%

The rate turns on one question: is the wager authorized under the law of the state where it’s accepted? If yes, the rate is 0.25% of the amount wagered. If no, the rate jumps to 2%.¹ The 0.25% rate has held since 1982.

The tax is calculated on the full amount wagered, not on net winnings or the operator’s margin. Any charges connected to placing the bet are part of the taxable amount. One narrow carve-out: if the operator collects a separately identified amount from the bettor equal to the excise tax, that pass-through can be excluded from the base.¹ Most legal sportsbooks absorb the 0.25% rather than itemize it.

Who Actually Owes It

Three groups are on the hook. Anyone in the business of accepting wagers owes the tax on every wager placed with them. Anyone conducting a wagering pool or lottery owes the tax on all wagers in that pool or lottery. And any person required to register with the IRS who takes wagers on behalf of someone else, without registering that other person’s name and address, becomes personally liable for the tax on those wagers.¹

That third category catches agents. If you take bets for a bookmaker and don’t register the bookmaker’s identity with the IRS, you personally owe the tax on every wager you accepted, even if you kept none of the money.

Form 11-C: Registering and Paying the Annual Tax

Everyone liable for the wagering tax (and everyone who receives wagers on behalf of someone who is) must pay an annual occupational tax. It’s $500 per year by default, and $50 per year if the person handles only wagers authorized under state law.²

Form 11-C does both jobs: it pays the occupational tax and registers you. On it, you provide your name and residence, each location where you accept wagers, and the name and residence of every person receiving wagers on your behalf. Firms and companies must list all individual members. The IRS can ask for more information at any time.⁸

File your first Form 11-C before accepting any wagers. After that, renew by July 1 of each year you continue accepting them.⁹ The IRS returns a stamped copy as your proof of registration; keep it accessible for auditors and federal agents.

Form 730: Monthly Returns

Form 730 reports the per-wager tax and is due by the last day of the month following the month you’re reporting. January’s wagers are due by the end of February, February’s by the end of March, and so on.³ File every month, even months with zero taxable wagers.

Each entity with its own EIN files its own return. Form 730 asks for the gross amount of all wagers received during the month, the business name and address, the EIN, and the names and addresses of any agents or employees who received wagers on your behalf.¹⁰ Mail completed returns to the IRS service center in Ogden, Utah, at the address in the form instructions. Payment can go by check, money order, or through EFTPS.

Recordkeeping the IRS Expects

Daily records are mandatory. For each day, you must document the gross amount of wagers accepted, broken down by class or type of wager and by each separate event or contest. A sportsbook taking bets on a football game needs separate totals for straight bets, parlays, and other wager types on that game.¹¹

Beyond daily totals, keep records distinguishing wagers you accepted directly from those your agents accepted, any lay-off wagers you took from other taxpayers, and any excise tax collected from bettors as a separate charge. If you use agents, keep each agent’s name, address, employment period, and special tax stamp number. Agents keep their own daily log of gross wagers received, commission retained, and amounts turned over to the principal.¹¹ Records must be available for IRS inspection at any time. When records are incomplete, the IRS estimates the liability, and those estimates run high.

Lay-Off Wagers and Refunds

When a bookmaker hedges a large bet by placing a lay-off wager with another bookmaker, both wagers are technically taxable. The regulations avoid double taxation by allowing a credit or refund for the tax on the laid-off portion, but only when the person receiving the lay-off wager is also liable for the wagering tax.¹²

Claim the credit by attaching a certificate to the Form 730 for the month the wager was accepted and laid off. The certificate must include the name, address, and registration number of the person who took the lay-off wager, the date and amount of each laid-off bet, the specific event or contest, and the signature of the person accepting the lay-off wager acknowledging they will account for the tax. If you already paid the tax, file a refund on Form 843 or take the credit on a later monthly return. No interest is paid on lay-off refunds, and if you lay off with someone not liable for the wagering tax, the credit disappears.¹²

For overpayments unrelated to lay-off credits, file Schedule 6 of Form 8849. The window is three years from when the return was filed or two years from when the tax was paid, whichever is later.¹³

Penalties for Late or Missing Filings

Filing Form 730 late triggers a penalty of 5% of the unpaid tax for each month or part of a month the return is overdue, capped at 25%. Returns more than 60 days late carry a minimum penalty equal to the lesser of $525 or 100% of the tax due. Failing to pay by the deadline adds a separate 0.5% per month on the unpaid balance, also capped at 25%. When both penalties apply in the same month, the failure-to-file penalty drops by the failure-to-pay amount so the combined monthly hit stays at 5%.¹⁴ Interest compounds on top at the federal short-term rate plus three percentage points, which sits at 7% for the first quarter of 2026.¹⁵

Willful evasion is a felony. Deliberately trying to evade the wagering excise tax or occupational tax can bring a fine of up to $100,000 ($500,000 for a corporation), up to five years in prison, or both, plus the costs of prosecution.¹⁶ The IRS doesn’t have to prove the underlying operation was illegal; it only has to show you knew about the tax obligation and dodged it.

Confidentiality of What You File

The registration and reporting rules create an obvious problem for anyone operating in a state where their activity is illegal, and the tax code addresses it directly. Treasury employees cannot share wagering tax returns, registration information, payment records, or anything derived from those documents with anyone outside federal tax enforcement. Recipients within tax enforcement cannot pass the information along except for the same limited purpose.¹⁷

The protection reaches into criminal court. Wagering tax returns, registration stamps, payment records, and information derived from them cannot be used against a taxpayer in any criminal case except one enforcing federal tax law.¹⁷ A state prosecutor cannot use your Form 11-C or Form 730 filings to build a case against you for illegal bookmaking. Section 4424 was Congress’s response to Marchetti v. United States, in which the Supreme Court held that the Fifth Amendment bars prosecuting someone for failing to comply with the wagering tax registration and payment requirements while leaving the taxes themselves in force.¹⁸

1
Office of the Law Revision Counsel. 26 U.S.C. 4401 – Imposition of Tax
2
Office of the Law Revision Counsel. 26 U.S.C. 4411 – Imposition of Tax
3
Internal Revenue Service. Sports Wagering
4
Office of the Law Revision Counsel. 26 U.S.C. 4421 – Definitions
5
Office of the Law Revision Counsel. 26 U.S.C. 4402 – Exemptions
6
eCFR. 26 CFR 44.4402-1 – Exemptions
7
Internal Revenue Service. Charitable Gaming for Exempt Organizations
8
Office of the Law Revision Counsel. 26 U.S.C. 4412 – Registration
9
Internal Revenue Service. Form 11-C – Occupational Tax and Registration Return for Wagering
10
Internal Revenue Service. About Form 730, Monthly Tax Return for Wagers
11
eCFR. 26 CFR Part 44 – Taxes on Wagering
12
eCFR. 26 CFR 44.6419-2 – Credit or Refund on Wagers Laid Off by Taxpayer
13
Internal Revenue Service. Instructions for Schedule 6 (Form 8849)
14
Internal Revenue Service. Failure to File Penalty
15
Internal Revenue Service. Quarterly Interest Rates
16
Office of the Law Revision Counsel. 26 U.S.C. 7201 – Attempt to Evade or Defeat Tax
17
Office of the Law Revision Counsel. 26 U.S.C. 4424 – Disclosure of Wagering Tax Information
18
Justia U.S. Supreme Court. Marchetti v. United States, 390 U.S. 39 (1968)