The verdict up front: yes, you can deduct moneyline betting losses on your federal return — but only if you itemize deductions on Schedule A, and only up to the amount of your reported gambling winnings. That's the IRS rule, full stop. And depending on your state, you may not even get that much relief at the state level.
What does the IRS actually allow for gambling loss deductions?
Gambling losses are deductible only when a filer itemizes on Schedule A rather than taking the standard deduction. Since the standard deduction roughly doubled after the 2017 tax law, most bettors no longer itemize at all — which means most bettors effectively get zero deduction for their losses, even if they kept meticulous records. If you do itemize, losses are capped at the amount of gambling winnings you report. You can't use a brutal NFL playoff run to manufacture a net loss on your taxes.
For a broader look at how winnings are reported and how the W-2G threshold is changing, see Moneyline Winnings & Taxes: The 2026 W-2G Rule Change Explained. The short version: for 2026 earnings, the reporting threshold rises to $2,000 minimum, with winnings needing to be at least 300 times the wager — a significant shift from the current rules.
What counts as a deductible gambling loss?
Any losing moneyline wager placed at a licensed sportsbook qualifies, provided you can document it. The IRS expects a contemporaneous record — a betting diary, sportsbook account history, or year-end statement. If winnings exceed $5,000, up to 24% may be automatically withheld for federal income tax, reflected in Box 4 of your Form W-2G. That withholding is a credit against your tax bill, not a deduction, and it's separate from the loss deduction question entirely.
- Keep records of every losing wager: date, amount, odds, sportsbook, sport.
- Download year-end statements from every platform you use. Bettors with accounts at multiple sportsbooks must gather statements from all books to accurately report income and losses.
- Match total losses against total winnings — you can only deduct up to what you won.
Do state tax rules follow the federal rules?
Not always — and this is where things get messy. Some states do not allow gambling loss deductions at the state level even if you itemize federally. Nevada is a clean case: there's no state income tax on gambling winnings there at all, so the deduction question is moot. But in states like New York, Illinois, or Massachusetts — all active legal betting markets — the state tax treatment can diverge sharply from federal rules. Check your specific state's department of revenue guidance before assuming a federal deduction carries through.
State caveats apply to every situation here. Legality and tax treatment vary by jurisdiction.
How does hedge betting affect the loss calculation?
Running two-sided positions on the same game complicates things. One leg wins, one loses — but the IRS looks at each bet individually. The losing leg is still a loss, and the winning leg is still income. How you net those out on Schedule A matters. For a detailed breakdown, read Hedge Betting on Moneylines: Tax Implications of Two-Side Payouts.
What records should moneyline bettors keep all year?
- A running log of every bet: date, sport, teams, odds, stake, outcome.
- Year-end account statements from each licensed sportsbook — FanDuel, DraftKings, BetMGM, Caesars, bet365, BetRivers, and any others.
- Any W-2G forms issued by those operators.
- Bank or payment records showing deposits and withdrawals if your log is ever questioned.
If you want to understand the odds side of the equation before worrying about taxes — what those positive and negative numbers actually mean for your payout — How American Moneyline Odds Actually Work is the right starting point. And for quick answers on how the calculator itself works, visit the Moneyline Calculator FAQ: Your Betting Questions Answered.
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