How are DraftKings winnings taxed in 2026?
By the W2gMatch team · Sources checked 09-28-2026 · General information, not tax advice.
DraftKings issues a W-2G for a 2026 sportsbook payout of $2,000 or more and at least 300 times the wager, and for a casino slot win of $2,000 or more. DFS winnings of $2,000 or more a year come on a 1099-MISC. Every dollar is taxable, and for 2026 only 90% of losses are deductible (IRC 165(d), Pub. L. 119-21).
What does DraftKings report to the IRS in 2026?
DraftKings issues a Form W-2G for a 2026 sportsbook payout of $2,000 or more when the payout is at least 300 times the wager. [1] The IRS instructions put the floor in one sentence: “The minimum threshold amount for payments made in calendar year 2026 is $2,000.” [1] The same $2,000 floor applies to a slot, bingo or keno win on DraftKings Casino, with no 300-times test. [1] Daily fantasy is different: DFS winnings are not wagering winnings on a W-2G but income reported on Form 1099-MISC, and for payments made after December 31, 2025 the 1099-MISC floor is $2,000 for the calendar year, up from $600 (IRC 6041(a), amended by Pub. L. 119-21 section 70433). [4]
The forms are reporting rules, not tax rules. Every dollar you win on DraftKings is taxable income whether or not a form is issued, and it goes on Schedule 1 (Form 1040). [3]
| DraftKings product | Form | Tax year 2025 | Tax year 2026 | Src |
|---|---|---|---|---|
| Sportsbook (straight bets, parlays, futures) | W-2G | $600 and 300 times the wager | $2,000 and 300 times the wager | [1] |
| Casino slots | W-2G | $1,200, no odds test | $2,000, no odds test | [1] |
| Casino keno | W-2G | $1,500, no odds test | $2,000, no odds test | [1] |
| Daily fantasy (DFS) | 1099-MISC | $600 for the year | $2,000 for the year | [4] |
| Loss deduction (all products) | Schedule A | 100% of losses, up to winnings | 90% of losses, up to winnings | [2] |
The 2025 column applies to the return for tax year 2025, filed in 2026. The 2026 column applies to payments made in calendar year 2026 and to the tax year 2026 return filed in 2027. The IRS says the $2,000 floor is adjusted for inflation for calendar years after 2026. [1] The per-game detail is on the W-2G threshold page.
Does DraftKings withhold taxes?
DraftKings withholds 24% federal income tax from a sportsbook win only when the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. [1] The IRS instructions read: “You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. Withhold 24% of the proceeds.” [1] Withheld tax appears in Box 4 of the W-2G, and it is a credit against your tax, not the tax itself. [1] A separate 24% backup withholding applies when the winner has not furnished a correct taxpayer identification number. [1]
Because the $5,000 trigger sits well above the $2,000 reporting floor, most DraftKings W-2Gs show $0 in Box 4. A W-2G with nothing withheld still means the full amount in Box 1 is reportable income.
Three DraftKings bets, worked through
All three are 2026 sportsbook payouts. “Payout” is what DraftKings pays you, stake included.
No form, but the win is still taxable income on Schedule 1.
A W-2G with nothing withheld. The tax on the $3,500 is paid with the return.
The $1,920 is a prepayment. If your marginal rate is above 24%, more is due; below it, some comes back as a refund.
The 300-times test is applied per wager, and the instructions treat two or more wagers as identical wagers when they are placed with the same payer and winning depends on the same event or events. [1] The sportsbook W-2G page covers parlays and same-game bets, and the W-2G threshold checker tests any single bet.
How does the 90% rule change my DraftKings taxes for 2026?
For tax years beginning after December 31, 2025, the deduction for gambling losses “shall be equal to 90 percent of the amount of such losses” and is “allowed only to the extent of the gains” (IRC 165(d), amended by Pub. L. 119-21 section 70114, signed July 4, 2025). [2] The deduction is still an itemized deduction on Schedule A, so it helps only if you itemize. [9] [3] DraftKings winnings are reported in full on Schedule 1; losses never reduce that figure directly. [3]
Same bettor, same break-even year. At a 22% marginal rate the 2026 figure is $440 of federal tax on no net win; at 32% it is $640. This is the phantom income the 90% rule creates.
A standard-deduction filer gets no benefit from losses in either year. The $5,000 is taxed in full.
The larger your DraftKings volume, the larger the 10% that is lost: a bettor who churns $200,000 through the book and finishes level owes tax on $20,000 in 2026. The 90% cap page works through more cases and the sports betting calculator runs your own totals.
When will DraftKings send my 2026 tax forms?
DraftKings says Forms W-2G and 1099-MISC for 2026 taxes are expected to be available online at the end of January 2027, and if the last day of January falls on a weekend the forms may be made available the following business day. [5] The forms are posted in your DraftKings account rather than only mailed, so the fastest route is to download them there. Our DraftKings statement how-to walks through the download and the win/loss statement.
A 2026 W-2G reports the date won in Box 2, the reportable winnings in Box 1, the type of wager in Box 3 and any federal tax withheld in Box 4; state winnings and state withholding are in Boxes 14 and 15. [1] There is no box for losses. [1]
Does the IRS know about my DraftKings winnings if I got no form?
A W-2G or 1099-MISC is a copy of what DraftKings sent to the IRS, so anything on a form is matched against your return. When the IRS finds income on a form that is not on the return, it sends a CP2000 notice proposing additional tax. [10] Winnings below the form floors are not matched that way, but they are still taxable and still reportable. [3] The IRS asks for “an accurate diary or similar record” of winnings and losses, with tickets, statements and receipts behind it. [3]
If you already have a notice, the CP2000 page explains how to answer it with the losses the IRS did not see.
How do I reconcile the DraftKings win/loss statement with my W-2Gs?
The W-2Gs are individual payouts. The win/loss statement (the operator's annual summary of your tracked wins and losses) is a year-long total, and the two are not the same number: a W-2G payout is inside the statement’s wins, and the statement’s losses are what you will deduct at 90% on Schedule A. Report the winnings, then substantiate the losses with the statement and your own log. [3] The reconciliation page covers the mismatches we see most, and if you withdrew through a payment app there may also be a Form 1099-K to explain. DFS players should read the fantasy sports page; the FanDuel how-to covers the other book most DraftKings players also use.
What about state tax on DraftKings winnings?
New Jersey, where DraftKings holds its online licenses, taxes all gambling winnings under its Gross Income Tax, withholds New Jersey tax at 3% of the payout for residents and nonresidents when withholding applies, and lets you offset winnings with losses from the same year, but never below zero. [8] Other states range from full conformity with the federal deduction to no loss deduction at all. The New Jersey page and the state-by-state page have the rules for where you file.
Filing a 2025 DraftKings return in 2026
The return for tax year 2025, due in 2026, still uses the old rules: a sportsbook W-2G at $600 and 300 times the wager, slots at $1,200, keno at $1,500, a DFS 1099-MISC at $600, and a loss deduction of 100% of losses up to winnings for itemizers. [1] [4] [2] The 90% rule applies to taxable years beginning after December 31, 2025, so the first affected return is the 2026 return filed in 2027. [2]
Will the 90% rule be repealed before I file?
Not yet. On September 16, 2026 the House Ways and Means Committee voted 38-5 to order H.R. 10357, the Digital Asset Tax Certainty Act introduced by Rep. Jason Smith on September 14, 2026, reported to the House. [7] The bill carries language that would remove the 90% limit and restore the full deduction of losses up to winnings, retroactive to January 1, 2026. [6] The House is not scheduled to return until after the November 2026 midterm elections, the Senate has not acted, and nothing is enacted. [6] The 90% rule is the law for 2026 returns as of the date on this page; the repeal status page tracks H.R. 10357 and the FAIR BET Act (H.R. 4304).
Related questions
How much can I win on DraftKings before I get a W-2G in 2026?
DraftKings issues a W-2G when a single 2026 sportsbook payout is $2,000 or more and at least 300 times the wager (IRS Instructions for Forms W-2G and 5754, rev. 01/2026). A slot win of $2,000 or more on DraftKings Casino gets one with no odds test. Wins below those floors are still taxable.
Does DraftKings withhold taxes?
Only on large long-odds wins. DraftKings withholds 24% federal tax when the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. Most DraftKings W-2Gs show $0 withheld in Box 4, and the tax is paid with the return.
When will DraftKings send my 2026 tax forms?
DraftKings says Forms W-2G and 1099-MISC for 2026 taxes are expected to be available online at the end of January 2027, or the following business day if January 31 falls on a weekend. Download them from your DraftKings account.
Do I get a W-2G or a 1099-MISC for DraftKings DFS?
Daily fantasy winnings are reported on Form 1099-MISC, and for payments made after December 31, 2025 the floor is $2,000 for the calendar year, up from $600 for 2025 (IRC 6041(a), amended by Pub. L. 119-21 section 70433). Sportsbook and casino wins use the W-2G.
How does the 90% rule change my DraftKings taxes for 2026?
For tax years beginning after December 31, 2025, only 90% of gambling losses are deductible, still capped at winnings and only if you itemize (IRC 165(d), amended by Pub. L. 119-21 section 70114). Win $20,000 and lose $20,000 on DraftKings in 2026 and $2,000 is taxable; in 2025 the same year owed nothing.
Do I have to report DraftKings winnings if I never withdrew the money?
Yes. Gambling winnings are taxable in the year you win them, whether the balance stays in the DraftKings account or is withdrawn. Withdrawals are not the taxable event and a 1099-K from a payment app is not the measure of your winnings.
Does the 90% rule apply to my 2025 DraftKings return?
No. The 2025 return, filed in 2026, allows 100% of losses up to winnings for itemizers and uses the old form floors of $600 for sportsbook W-2Gs and DFS 1099-MISCs, $1,200 for slots and $1,500 for keno. The 90% rule starts with tax year 2026.
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W-2Gs and statements are filed to the year as they arrive, so the 2026 return starts reconciled in January, under the 2026 loss rules. Filing 2025 late, or amending it? The same file works for 2025.
- IRS transcript read form by form
- Each W-2G matched to its statement
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Run your DraftKings year through the 90% rule
Enter your total sportsbook winnings and losses and see the taxable figure for 2026 next to what it would have been in 2025. Then start the session log that makes the losses deductible.
Sources
- IRS Instructions for Forms W-2G and 5754, Rev. January 2026
- 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- 26 U.S.C. § 6041(a) and (h), Information at source, as amended by Pub. L. 119-21 § 70433 (Legal Information Institute), amendment effective for payments made after December 31, 2025
- DraftKings Help, Key tax dates for DraftKings (US), read September 6, 2026
- Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
- GovInfo, Bill status for H.R. 10357, Digital Asset Tax Certainty Act (119th Congress), actions through September 16, 2026
- New Jersey Division of Taxation, Lottery and gambling winnings, page dated April 1, 2026
- IRS Instructions for Schedule A (Form 1040), line 16, Other itemized deductions, tax year 2025 edition
- IRS, Understanding your CP2000 series notice, page last reviewed July 14, 2026
Related
- How do I get my DraftKings win/loss statement and W-2G forms?
- When do sportsbooks issue a W-2G in 2026 ($2,000 and 300x)?
- What is the OBBBA 90% gambling loss cap for 2026?
- How are daily fantasy sports winnings taxed?
- How do I reconcile W-2Gs, 1099-Ks and win/loss statements for a gambling client?
- FAIR BET Act status: is the 90% gambling cap repealed?
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.