IRS-CI Warns Gamblers About Illegal Sports Betting and Taxes

With football season now underway, the Internal Revenue Service’s Criminal Investigation (IRS-CI) unit is urging taxpayers to follow their state’s sports betting laws and to report all winnings when they file their taxes.

IRS-CI reports that nearly 50% of Americans have placed bets on sports at some point in time

Individuals who engage in sports betting activities are required to report their winnings on their annual tax return. The IRS encourages individuals to keep detailed records of all gambling transactions. This includes bets placed, winnings received, and losses incurred.

IRS-CI said about 50% of Americans have bet on sports at some point in time. The federal agency is reminding U.S. taxpayers to wager safely and legally this football season. Illegal gambling activities can result in criminal charges ranging from money laundering to tax evasion.

According to the American Gaming Association (AGA), an estimated $35 billion is expected to be wagered at U.S. sportsbooks in the 2024 NFL season.

The AGA says the $35 billion estimate is about a 30% increase from the amount gambled last year. The annual revenue from the illegal sports betting market in the U.S. is estimated at more than $700 million.

Federal agency said it initiated 151 investigations into illegal gambling activity totaling more than $178.8 million

Between fiscal years 2020 and June 2024, the IRS-CI said it initiated 151 investigations into illegal gambling activity totaling more than $178.8 million and resulting in 71 sentencings with an average prison term of over two years.

“Sports betting has grown exponentially in the past five years and is more common than ever. While online gambling is easily accessible, it’s not always legal,” said IRS-CI Chief Guy Ficco in the news release.

“As this year’s football season kicks off, IRS-CI special agents are continuing to monitor trends and using our expertise to root out criminal activity related to illegal gambling like money laundering and tax evasion.”

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations. Such probes include tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft, and more.

“Ignorance of the tax law does not exempt individuals from their responsibilities,” IRS-CI added in its news release.

Sports bettors who are unsure about their tax obligations or have questions about reporting gambling income are encouraged to consult tax professionals. They can also visit the official IRS website for guidance.