HomeArizona Gambling taxes

Arizona gambling taxes

It’s exciting to win money gambling, and you are naturally going to celebrate your success for a while. However, after the smoke clears, it is time to take a step back and consider the implications. Unfortunately, taxes can enter the picture, and we explain the details of Arizona gambling taxes here.

Fact checked by: Gary Garry
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Do you pay taxes on Arizona online gambling winnings?

Yes, you need to pay taxes on winnings for online gambling in Arizona. You have to claim all income when you file your federal and state tax returns.

Gambling does not sit in some separate category – income is income, and income is taxable, plain and simple.

Does the IRS know if you win money gambling?

Arizona sportsbooks and casinos are required to notify the Internal Revenue Service about wins that exceed certain thresholds.

They do this by filing IRS Form W-2G, and the winner also receives a copy of the form. These are the win levels that trigger IRS notification:

  • $600 or greater on a wager that is at least 300 times the amount of the winning bet
  • $5,000 or more in a poker tournament
  • Keno jackpots of $1500 or more
  • Slot or bingo wins that exceed $1,199

Is reporting required if you don’t receive Form W2-G?

Absolutely, you are not complying with the law if you fail to report gambling income, even if you do not receive a form W2-G from the gaming company.

Will the Arizona betting app automatically withhold taxes?

Under most circumstances, the answer is no, you will receive all of your winnings and it is up to you to pay your taxes, but there is an exception.

If you win more than $5,000, Arizona sports betting apps may be required to withhold up to 28% to account for federal income taxes assuming you provide your Social Security number. When no Social Security number has been recorded, the figure goes up to 31%.

Note: This 28% figure comes from a supplemental IRS publication. Most online sources are using the 24% figure that was in place in 2021.

What is the AZ gambling tax percentage rate?

There is no particular rate that is specific to gambling winnings in Arizona per se. You are taxed based on your overall income, and this is true at the federal and state level. When you’re filing, simply add gambling winnings as “other income” on Schedule 1 of Form 1040.

On the state level, a flat tax has gone into effect in Arizona and the rate is 2.5% for all filers.

Are gambling losses deductible?

Yes, gambling losses are deductible under one condition. If you are going to be claiming a profit gambling, you can claim your losses to accurately calculate your net gambling winnings.

What are the penalties for failure to pay taxes on gambling winnings?

There is a Failure to Pay Penalty if you don’t pay taxes on your gambling winnings. For every month that you do not pay what you owe, there is an added .05% charge, and it maxes out when it reaches 25%.

How much tax revenue does Arizona gambling generate?

Native American tribes in Arizona operate 25 Class III casinos, and they have generated over $2 billion in revenue for the Arizona Benefits Fund since 2003. Since Arizona launched sports betting in September 2021, over $450 million in revenue has been raked in by the state.

The Arizona Lottery was established in 1980, and it has produced over $5 billion in revenue for the beneficiary programs over the years.

Who benefits from Arizona gaming revenue?

Over half of the revenue that is directed to the Arizona Benefits Fund goes toward educational initiatives. It also supports trauma centers, emergency services, tourism, and wildlife conservation, and a portion is used to fund problem gaming resources.

The truth about Arizona gambling tax calculators

You may see “Arizona gambling tax calculators” or “AZ gambling winnings calculators” if you Google the term. There are sites that have calculators that actually calculate taxes in general based on a certain percentage, and they call them “gambling tax calculators.”

In reality, they are not specifically calculating a gambling tax, because there is no gambling tax. If you include your gambling winnings in your overall taxable income and use a general AZ tax calculator, you will come up with an estimate of your overall tax responsibilities.


Is there an Arizona Lottery Tax?

No, there is no special tax for the Arizona Lottery. Any winnings that you receive will be looked upon as taxable income like all other forms of income.

How much do you have to win to be required to pay taxes?

All winnings from gambling in Arizona are taxable, so there is no minimum threshold.

How do you report gambling winnings to the Internal Revenue Service?

To report gambling winnings to the IRS, simply include the winnings on line 8 of Schedule 1 of IRS Form 1040.

What about claiming out-of-state gambling winnings, is that required?

Yes, it is required to declare out-of-state gambling winnings, but if you pay taxes in that state at the time that you won the money, you will not be required to pay taxes on the winnings twice.

How are group gambling winnings in Arizona handled?

When a group combines forces to win a wager that they will be splitting among themselves, the paying entity will submit IRS Form 5754 along with a W2-G. This will alert the IRS to the fact that the winnings will be divided among multiple taxpayers.

Fact checked by: Gary Garry