Betting winnings are taxable income in the United States. How tax is handled depends on how much you win, where the bet is placed, and where you live.
This article explains, in plain English:
When tax is withheld automatically
What counts as “winnings” (and what doesn’t)
How federal and state rules work — especially in Connecticut
Why some wins are taxed and others aren’t
Where to find your tax forms
This applies to bets placed online, by phone (Telebet), or at physical MyWinners venues.
How Federal Tax on Betting Winnings Works
In the US, federal tax rules for betting winnings are set by the IRS. These rules apply nationwide and are not specific to MyWinners.
When Federal Withholding Applies
Federal tax withholding is required only when both of the following are true:
Your net winnings are $5,000 or more, and
The payout is at least 300 times the amount of your original bet
When these thresholds are met:
Federal tax withholding is automatic
MyWinners is legally required to withhold tax before paying out
A W-2G tax form is generated for the win
If either condition is not met, federal withholding does not apply.
What Counts as “Winnings” (This Is Important)
Tax is calculated on winnings, not the total payout, which means your original stake is not taxed.
Example:
You bet: $100
You receive back: $5,100
Your winnings are: $5,000
Tax (if applicable) is calculated on $5,000, not $5,100.
This is one of the most common points of confusion, and it applies at both federal and state level.
How State Tax Withholding Works
State income tax withholding rules vary by state and are separate from federal tax rules. Federal tax withholding may apply to pari-mutuel winnings that meet IRS W-2G thresholds, regardless of where the bet is placed.
State tax obligations are handled differently from federal withholding. In many cases, state tax is not automatically withheld at the time of payout and is instead addressed when a customer files their state tax return.
Connecticut State Tax (Connecticut Customers)
Connecticut follows the federal W-2G reporting framework for gambling winnings. This means that qualifying winnings may be reported using a W-2G form when federal thresholds are met.
For Connecticut residents, gambling winnings are treated as taxable income and may be subject to Connecticut state income tax. However, Connecticut state tax is not always withheld at the time of payout, even when federal withholding applies.
Connecticut does not apply a single flat tax rate to gambling winnings at payout. The commonly referenced 6.99% rate represents Connecticut’s top marginal income tax rate, which applies based on a customer’s total annual income when filing their state tax return. It is not a universal withholding rate and does not automatically apply to every gambling win.
As a result, Connecticut tax obligations are often settled when a customer files their Connecticut tax return rather than through automatic withholding at the time of the wager payout.
These principles apply to qualifying MyWinners wagers placed by Connecticut residents, whether online, by phone, or at a licensed venue.
Customers are responsible for reporting gambling winnings on their Connecticut tax return as required. For questions about individual tax treatment, customers should consult a qualified tax professional.
Other States
See our full article on How US States Tax Betting Winnings.
Why Tax Is Withheld Automatically
MyWinners does not decide when to withhold tax.
When withholding occurs, it is because:
Federal or state law requires it
The bet meets specific IRS and state thresholds
The system applies the rules automatically and consistently
The same rules apply to:
Online betting
Phone betting (Telebet)
Bets placed at physical venues
Where to Find Your Tax Forms (W-2G)
When a win meets IRS reporting thresholds:
A W-2G form is generated automatically
The form shows:
The amount of winnings
Any federal or state tax withheld
Your W-2G form can be downloaded from your MyWinners account when available.
When Bets Settle and Tax Is Applied
Most bets settle as soon as official results are confirmed.
In some cases, settlement may take a little longer due to:
Final confirmation of results
Pool calculations
When a bet settles:
Winnings are credited to your account
Any required tax withholding is applied automatically
Net winnings are paid out after withholding
💡 Did You Know? Federal and state tax withholding is calculated on your winnings only, not the full payout. Your original stake is returned to you and is never taxed.
Frequently Asked Questions
Why was tax taken from one win but not another?
Why was tax taken from one win but not another?
Tax withholding only applies when specific federal (and sometimes state) thresholds are met. Smaller wins often do not trigger withholding.
Why wasn’t my original stake taxed after I won?
Why wasn’t my original stake taxed after I won?
Tax is applied to winnings only, not to the amount you originally bet.
Why does my friend in another state see different tax treatment?
Why does my friend in another state see different tax treatment?
State tax rules vary. Some states require withholding at payout, while most do not.
Can I get withheld tax back?
Can I get withheld tax back?
MyWinners cannot advise on individual tax returns. Any recovery or adjustment of withheld tax is handled when you file your taxes.
Does MyWinners give tax advice?
Does MyWinners give tax advice?
No. This article explains how tax withholding works at payout. For personal tax advice, consult a qualified tax professional.
How Can Connecticut Customers Access W-2G Tax Information?
How Can Connecticut Customers Access W-2G Tax Information?
Connecticut customers can access W-2G tax information through their MyWinners account on the website or mobile app. Telebet customers can also obtain this information by contacting Customer Support if needed.
How Can Telephone-Only Bettors Obtain W-2G Tax Forms in Connecticut?
How Can Telephone-Only Bettors Obtain W-2G Tax Forms in Connecticut?
Connecticut customers who place bets by telephone only can request W-2G tax forms by contacting Customer Support. Forms can be provided by email or sent by postal mail upon request.