US taxes on bingo, skill-game, and sweepstakes winnings
US federal treatment depends on the activity and the taxpayer. A “skill game” or “Sweeps Coins” label does not settle its tax classification. This guide concerns US federal rules, reviewed October 21, 2026; state rules can differ. Ask a qualified preparer how they apply to your records.
Tax year 2026: the loss deduction changed
Section titled “Tax year 2026: the loss deduction changed”For a casual gambler who itemizes, IRS Publication 505 (2026) limits the Schedule A gambling-loss deduction beginning in 2026 to the lesser of 90% of gambling losses or gambling winnings. Records and other applicable deduction limits still matter. The percentage applies to losses.
Public Law 119-21, §70114 applies the change to tax years beginning after December 31, 2025. For a calendar-year taxpayer, a return filed in 2026 for 2025 concerns the 2025 tax year; the new rule concerns 2026 activity, normally reported in 2027.
Worked examples for a casual gambler
Section titled “Worked examples for a casual gambler”Assume the amounts are correctly classified gambling winnings and documented gambling losses, the taxpayer itemizes, and no further limitation reduces the deduction.
| Tax year | Winnings | Losses | Loss calculation | Maximum loss deduction |
|---|---|---|---|---|
| 2025 | $1,000 | $1,000 | Lesser of losses or winnings | $1,000 |
| 2026 | $1,000 | $1,000 | min(0.90 × $1,000, $1,000) | $900 |
| 2026 | $1,000 | $1,500 | min(0.90 × $1,500, $1,000) | $1,000 |
In the second row, $1,000 of winnings remains reportable and the separate loss deduction is at most $900. The $100 difference is not a $100 tax bill: the actual tax depends on the entire return. A taxpayer taking the standard deduction cannot simply use this Schedule A example. See the IRS casual-gambler guidance for reporting and records.
Do not automatically apply these examples to professional activity, non-gambling skill-contest income or promotional prizes. Classification and expense treatment need their own analysis.
W-2G reporting is a separate question
Section titled “W-2G reporting is a separate question”The January 2026 W-2G instructions generally require payer reporting for bingo winnings of $2,000 or more paid in 2026, without subtracting the wager. All winnings in one bingo game count as one payment. Check the instructions for the payment year because the threshold is adjusted for inflation.
Regular gambling withholding does not apply to bingo, although 24% backup withholding can apply when a correct taxpayer identification number is missing. A reporting threshold is not a tax-free allowance: taxable winnings below it still need reporting. Cash and the fair market value of noncash prizes can matter.
Sweepstakes and skill-contest records
Section titled “Sweepstakes and skill-contest records”Form 1099-MISC can cover non-gambling prizes and awards. Do not select a form or deduction solely from a platform’s marketing category. Keep the prize notice, contest rules and any form received, and ask the payer to correct inaccurate information.
A withdrawal can combine returned deposits and prizes. For example, returning your $50 deposit plus a $20 prize creates a $70 transfer; the transfer amount alone does not establish $70 of income. Keep the underlying transactions instead of using wallet cash-outs as an income total.
A ledger your preparer can use
Section titled “A ledger your preparer can use”Record date, platform and product, location, game or contest, entry amount, prize, cash versus promotional balance, payment fee and reference number. Keep account statements, W-2G/1099 forms, a contemporaneous win/loss diary and evidence of noncash prize value. Preserve records before closing an account.
Ask the preparer to reconcile gross winnings with the forms, classify each activity, evaluate supported losses or expenses, check state sourcing and estimated payments, and apply the correct tax year. The withdrawal guide explains why an account balance and usable cash can differ.