WOYALE.Tax on crypto bets
A crypto win can create two tax events: gambling income when you win, then a gain or loss when you sell the coins. Here is how each one works.
Guides in this section
Minutes to read them all
Is it legal where you live?
All 50 states and DC, checked against each regulator.
Every tax guide
Read them in order, or jump to the question you have.
How crypto sports betting winnings are taxed in the US
Winnings paid in crypto are taxable income, valued in US dollars when you receive them.
Can you deduct gambling losses? The 90% limit from 2026
You can deduct gambling losses only on Schedule A, only up to your winnings for the year, and, for tax years beginning after 2025, only 90% of the losses.
What records to keep for crypto sports bets (with a sample log)
The IRS expects an accurate diary of wins and losses with supporting documents.
How states tax gambling winnings, including crypto payouts
Most states with an income tax also tax gambling winnings, and many start from your federal return.
Two tax events from one crypto win
A crypto win can be taxed twice, for two different reasons.
- The win is gambling income. You report its US dollar value on the day you received it, whether or not a form arrives. That dollar value also becomes your cost basis in the coins.
- Selling or swapping the coins is a property disposal. The IRS treats crypto as property. When you later sell or swap the coins you won, the difference between what you get and your cost basis is a capital gain or loss, reported separately.
Here’s a worked example with round numbers. You win 0.01 BTC when bitcoin is at $100,000, so you have $1,000 of gambling income and a $1,000 basis. Two months later you sell at $110,000 and get $1,100. That sale is a $100 short-term capital gain on top of the $1,000 of winnings. If the price had fallen to $90,000 instead, you would have a $100 capital loss, but the $1,000 of gambling income still stands. How crypto winnings are taxed goes through the reporting line by line.
Losses: the 2026 change
Gambling losses are deductible only if you itemize on Schedule A, and only up to your winnings for the year. For tax years beginning after 2025 there is a new limit: you can deduct only 90% of your losses. A break-even year can therefore still leave taxable income.
| Tax year 2026 | Amount |
|---|---|
| Winnings | $10,000 |
| Losses | $10,000 |
| Deductible losses (90%) | $9,000 |
| Gambling income left to tax | $1,000 |
A bill to restore the full deduction has not become law. Deducting gambling losses covers the limit and who it hits hardest.
Records that hold up
The IRS expects a diary of wins and losses kept as you go, backed by documents. Crypto adds its own items: the transaction hash, the wallet addresses, the coin amount, the dollar value and its source, and a timestamp for every deposit, bet, payout and sale. Keep them for at least three years from the date you file. What records to keep includes a sample log you can copy.
An offshore site won’t send you a W-2G, and a form never decides whether income is taxable. For 2026, a licensed operator issues one for sports winnings of at least $2,000 that are also at least 300 times the stake. Your obligation to report starts at the first dollar.
Your state’s share
Most states with an income tax also tax gambling winnings, and many start from your federal numbers. The rules differ most on two points: whether you can deduct losses, and whether the state taxes winnings of people who live elsewhere. A few states have no income tax at all. How states tax gambling winnings compares the rules, and each state page has a tax section for that state.
When to get help
These guides explain the rules. They don’t replace advice for your situation. A tax professional is worth paying when your winnings are large, you traded the coins you won, or you have years of crypto activity with patchy records.