How to Prove Gambling Losses on Your Tax Return

To prove gambling losses on your tax return, keep a contemporaneous diary of every session you play, backed by casino win/loss statements, W-2G forms, online platform activity reports, and bank or credit card records that corroborate the dates and dollar amounts. The IRS puts the burden of proof on you, and without that paper trail your winnings are taxed in full while your losses count for nothing. One more thing to know before you start collecting receipts: losses are only deductible if you itemize on Schedule A, and starting with the 2026 tax year, the deduction is capped at 90% of your reported gambling winnings rather than the full amount.¹²

Keep a Same-Day Gambling Diary

The single most important record you can produce is a diary you update the same day you play. The IRS and tax courts treat a contemporaneous log as strong evidence of honesty. Entries scribbled months later or reconstructed at tax time carry far less weight, and examiners can usually tell the difference.

Under IRS guidance going back to Revenue Procedure 77-29, each entry should include the date and type of wagering activity, the name and location of the venue, the names of anyone who was with you, and the amounts you won and lost. Record each session’s result separately, not a running total.³

A bound notebook works. So does a spreadsheet or a note-taking app, as long as timestamped entries show you logged each session close to when it happened. The goal is a record that clearly was not fabricated after the fact. Taxpayers who produce a detailed, session-by-session log fare far better in audit disputes than those who hand over a year-end estimate.

What Counts as a Session

For slot machines, the IRS proposed a safe harbor in Notice 2015-21: a session begins with your first wager on a particular type of game and ends when you finish your last wager on that same game type before midnight. If you leave a slot machine to eat lunch and come back to the same casino the same day, that still counts as one session.⁴

You calculate net gain or loss at the end of each session. A session where payouts exceed wagers is a gain; the reverse is a loss. You cannot net different sessions against each other when reporting. Each session’s outcome stands on its own in your diary.

Documentation by Type of Gambling

Beyond the general diary entries, IRS Publication 529 lays out documentation expectations for each type of gambling. These aren’t arbitrary preferences. They reflect what examiners actually look for.³

Slot machines: record the machine number along with your winnings by date and time. Loyalty card tracking helps here, since the casino’s electronic records can corroborate your log.
Table games (blackjack, craps, roulette, poker): note the table number and whether your casino credit was issued in the pit or at the cashier’s cage. Casino credit records serve as independent verification.
Horse and dog racing: keep a record of the races you bet on, wager amounts, and amounts collected on winners. Hold onto unredeemed losing tickets and any payment records from the track.
Keno: save copies of tickets validated by the establishment, plus any casino credit and check-cashing records.
Bingo: track the number of games played, cost of tickets purchased, and amounts collected on winners.
Lotteries: keep ticket purchase records, dates, and winning or losing ticket stubs.

The common thread is specificity. A diary entry that says “lost $500 at the casino” is almost worthless. An entry that says “March 8, Bellagio, blackjack table 14, bought in for $500, cashed out $200, net loss $300” is the kind of record that survives an audit.

Online and Mobile Betting Records

Most sports betting and online casino activity now runs through apps like DraftKings, FanDuel, and BetMGM. Every wager generates an electronic record, which is useful but not a substitute for your own diary.

Most platforms offer a Player Activity Statement or Win/Loss Statement you can download from account settings. These show deposits, withdrawals, wagers, and payouts over a given period. They are useful backup documentation, but they are not tax forms and the platforms do not send them to the IRS. You still need to maintain your own diary of session-level results, because the platform’s annual summary may aggregate activity in ways that don’t match IRS reporting expectations.¹

Download activity statements from every platform you used before tax season. If you used four apps, you need four statements. Cross-reference them against your diary and bank records so nothing is missing. Online platforms also issue Form W-2G when winnings hit reporting thresholds, so check for those in your account’s tax document section as well.

Third-Party Records That Back Up Your Diary

Your diary is the backbone. Third-party records are what make it credible. The IRS gives more weight to documentation generated by someone other than you, because a casino or bank has no incentive to inflate your losses.

Form W-2G

Casinos and other payers issue Form W-2G when your winnings hit certain thresholds. For 2026, the reporting threshold for slot machines, bingo, and keno was raised to $2,000, up from the previous $1,200 for slots and bingo and $1,500 for keno. For keno, the $2,000 threshold applies after subtracting the wager. Sports betting triggers a W-2G at $2,000 if the winnings are also at least 300 times the amount of the wager.⁵

The form shows the payout amount and any federal tax withheld, which is 24% when withholding applies.⁵ Keep every W-2G you receive. And remember: you owe tax on all gambling winnings, not just the ones that triggered a W-2G. Wins below the reporting threshold are still taxable income you must report.

Form 5754

When winnings belong to a group, such as coworkers splitting a lottery ticket, Form 5754 allocates each person’s share. The person who physically collects the winnings fills out this form so the payer can issue separate W-2Gs to each member of the group.⁶

Casino Win/Loss Statements

Many casinos provide annual win/loss statements through their player rewards programs. Request these every year, even if the casino doesn’t send them automatically. They draw from the casino’s internal tracking systems and carry significant weight in an audit.

Bank and Credit Card Records

Bank statements, credit card statements, canceled checks, and ATM withdrawal slips from the casino floor all corroborate that you were actually at the venue on the dates you claim and that money moved in the amounts you report. If your diary says you lost $2,000 at a casino on April 5 but your bank records show no ATM withdrawal or credit transaction near that casino that week, an examiner will notice the gap.

The 90% Cap and Why Precise Numbers Matter

The old rule capped your loss deduction at your total winnings. If you won $8,000 and lost $12,000, your deduction was capped at $8,000, and the losses could zero out gambling income but never shelter wages or other income.¹

Starting with the 2026 tax year, the One Big Beautiful Bill tightens this further. You can now deduct only 90% of your gambling winnings. Report $10,000 in winnings and the most you can deduct in losses is $9,000, leaving at least $1,000 taxable even if your actual losses exceeded your winnings.²

Because the deduction goes on Schedule A, it only helps if your total itemized deductions exceed the standard deduction, which for 2026 is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.⁷ Winnings go on Schedule 1 as “Other Income”; losses go on Schedule A as “Other Itemized Deductions.” You cannot report the net.¹ All of which means the math no longer nets to zero, and vague records aren’t good enough. You need precise numbers on both sides.

How Long to Keep the Records

The general rule is to keep all gambling documentation for at least three years from the date you file the return claiming the deduction. That’s the standard window the IRS has to initiate an audit.⁸

If you underreport income by more than 25% of the gross income shown on your return, the IRS gets six years instead of three.⁸ Gamblers who fail to report all their winnings, whether intentionally or because they didn’t realize sub-threshold wins are taxable, can easily cross the 25% line. The safest approach is to keep everything for seven years.

If your deduction is denied during an audit and you lack documentation, the IRS can assess the additional tax plus a 20% accuracy-related penalty on the underpayment.⁹ Interest accrues on top of that from the original due date of the return. Poor record-keeping compounds fast.

State Rules May Not Match Federal

Several states, including Connecticut, Illinois, Indiana, Massachusetts, Michigan, West Virginia, and Wisconsin, do not allow gambling losses as an itemized deduction on state returns. These states generally tax based on federal AGI, which includes gambling winnings but not gambling losses. A gambler who breaks even federally can still owe state income tax on the full amount of winnings in these states. Check your state’s rules before assuming the federal deduction translates to a state-level benefit.

1
Internal Revenue Service. Topic No. 419, Gambling Income and Losses
2
Office of the Law Revision Counsel. 26 U.S. Code 165 – Losses
3
Internal Revenue Service. Publication 529, Miscellaneous Deductions
4
Internal Revenue Service. Notice 2015-21, Safe Harbor Method for Determining a Wagering Gain or Loss From Slot Machine Play
5
Internal Revenue Service. Instructions for Forms W-2G and 5754 (01/2026)
6
Internal Revenue Service. About Form 5754, Statement by Person(s) Receiving Gambling Winnings
7
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
8
Internal Revenue Service. How Long Should I Keep Records?
9
Internal Revenue Service. Accuracy-Related Penalty