Ryan Ermey, a senior reporter for CNBC’s Make It Money, is one of the many people who enjoy placing a wager or two in their free time. As statistics have demonstrated, sports betting is the preferred pastime of more and more people in the United States. However, some people are still not knowledgeable of the official tax laws surrounding gambling.
Ermey Talks about Sports Betting Pools
Ermey noted that some sports events offer huge prizes. He cited a recent National Football League survivor pool as an example. The pool was launched by Las Vegas’ Circa Sportsbook and has a prize of over $6 million. The format is as follows: the participants pay $1,000 to enter the competition. After that, each of them has to pick one NFL team per week. If that team wins a game, the participant survives for another week. If the team loses, so does the player. The catch is that a survivor pool player cannot pick the same team twice.
As reported by Ermey, two-thirds of the players have already lost the race. The Survivor Pool started with 6,133 participants but now, only 2,033 remain. The journalist attested the high number of participants to the humungous prize awaiting the winner. However, he also noted that a hypothetical winner must be aware that the prize would be taxed.
Ermey Advised Bettors to Pay Their Taxes
As a finance specialist, Ermey knows that one must report their income, regardless of the source. Ermey cited Ray Kondler, a certified public accountant at Kondler and Associates, LV. According to Kondler, one must report even insignificant incomes, like the winnings of a sports betting pool between friends or colleagues.
While the big $6 million prize from Circa Sportsbook will surely be reported to the IRS, one cannot expect casinos or participants in a friendly pool to report every meager winning. Therefore, it is up to the player to report their earnings. Kondler says that those who fail to do so risk problems with the IRS.
However, there is a “silver lining,” Ermey says. As per the US taxation rules, gamblers are allowed to deduct their losses from taxation. Therefore, a player who has a past losing streak may mitigate the taxes they have to pay for winning a bet. Losses can only be deducted to an extent that they offset a player’s winnings.
As per Kondler’s advice, it is best for a player to keep a separate track of their wins and losses.