By Kay Bell • Bankrate.com
Taxes » Income Taxes » Win A Super Bowl Bet? It's Taxable
America is a nation of risk takers, so it's no surprise we love games of chance. That's even more evident each year when the NFL's big event, the Super Bowl, rolls around.
More On Reporting Income:
American Gaming Association data, complete through 2012, show legal sports wagering in Nevada that year totaled $3.45 billion. But that figure is dwarfed by illegal bets. The National Gambling Impact Study Commission estimates illegal sports wagers amount to as much as $380 billion annually.
If the gambling study estimate is even remotely accurate, the U.S. Treasury is missing out on an
enormous amount of revenue since gambling winnings, whether obtained legally or illegally, are taxable.
But good luck, IRS collections agents, on getting your hands on ill-gotten gambling gains.
The federal tax agency has enough trouble collecting from legal bettors. Many people don't realize gambling winnings are taxable income. And even if the winners know that, a good many simply choose to ignore the tax law.
What the IRS knows
This skirting of tax laws is possible because the IRS doesn't know about every bet, and it is only aware of the big winners.
Legal betting operations -- state lotteries, casinos and horse-racing tracks -- are regulated, and that means there are rules for reporting when players are paid.