The term gross winnings refers to the total payout received by a player, including initial bet and the money won (net winnings). So, if you place in bet $10 and win another $10, you gross winnings will amount to $20:
Initial wager: $10
Net winnings: $10
Gross winnings: $20 ($10 + $10)
- The total amount of winnings received by a player after a win
Gross winnings are important because they are used to calculate your net winnings, which is done by subtracting your initial bet from your gross winnings. Use our Net & Gross Win calculator below to find out how much prize money you would get from a certain win.
Are Gambling Winnings Part of Gross Income?
Just like any other type of income, in most jurisdictions, your gambling income is subject to taxation. The exact rules will vary from country to country, but certain elements will stay the same, regardless of jurisdiction. Let’s look at the United States as an example:
In the US, you have to pay a tax of 24% on the total amount you are paid out by your bookmaker. Winning an item, rather than cash, won’t save you from taxation, either. If you, for example, win a car, you will have to pay 24% of the car’s value to the taxman.
While filing your tax returns, remember to include all of the winnings you’ve received from gambling in that past year in a single column. Follow this by adding the sums you’ve lost, which will become a tax-deductible sum. Your gambling losses cannot exceed your gambling income as you, obviously, can’t deduct more than you have gained.
Casino Wins in Tax Return Forms
While legislation around the world may vary, in accordance with American tax laws, your gambling income is reported in Form 1040. This is part of the US Individual Tax Return, line 21. Fill in this information carefully and diligently. The essential details to include are the specific dates you gambled on and the amounts you staked. You should also remember to write down the site or establishment where you gambled. You can also include the names of friends or other players present on those specific days. In the case of a taxation dispute or suspicion of money laundering, this will help you avoid unnecessary problems. You follow up this information with the total amount of money you lost and won. You are not allowed to reduce the gross winnings by subtracting the total loss and writing the difference between the two in your tax return forms.
While it might seem tempting for some to avoid declaring their gambling income, doing so is a very bad idea and we strongly discourage it, because it constitutes tax evasion, which is a serious offense punishable by hefty fines and, potentially, prison time.
Gross Gaming Win
Your gross gaming win is the amount you win before the platform deducts its commission.
Before you start placing your bets on various platforms, you should take the time to learn about your country’s tax laws in relation to gambling. Your gambling wins should always be fully documented, so you can present tangible evidence in case there ever is a need to do so. The venue where you gambled should, upon request, provide you with a slip to prove you were there, as well as how much you have won or lost.
Some gambling methods provide you with physical evidence of your participation. Scratch cards are a good example of this because you will have the actual card on your hands. Slot machines have records of the number together with the date and time in which your winnings have occurred.
If you aren’t a professional gambler, always report your winnings as Other Income. The losses are declared under miscellaneous deductions. When you’re fully engaged in gambling to earn your livelihood, then your winnings will count as your income, as gambling will constitute your career.
Withholding Your Gross Win
In the United States, there is a provision for withholding your gross winnings for the state tax rate of 25%. This happens when the amount of your winnings surpasses a set figure, which is usually set at $5000 USD. This is money won from different activities, including lotteries, sweepstakes, wagering pools, et cetera.
The gambling company declares such winnings plus the withheld amount on the W-2G form. They should also indicate their gaming revenue while filing their returns. The entity then gives one copy of this paperwork to the IRS and another one to you, as proof of having paid this tax. Other winnings are also issued with a similar form, depending on the specific game in question. For Keno, the form is issued for sums of $1500 and above, and slot machines, for $1200 or more.
In cases where the winnings are to be shared among more than one winner, there is a separate form to fill — Form 5754, which shows that the casino has divided the money among several winners. This is followed by filling this information on different W-2G Forms, which are submitted to the IRS with the names and details of each winner.
Professional bettors are known to seek out loopholes to avoid this type of taxation, with some going to such lengths as to move to other states or even countries that don’t have any taxes remitted from their winnings. The United Kingdom is one of the countries gamblers often move to.
Your gross winnings constitute the total amount you win, rather than the net amount you will be able to take home. The establishment or site will then subtracts its commission. The remainder goes into your bank account. This money is not fully yours, however, since gambling income is subject to taxation, which will depend on your country’s tax code.