Privacy: A Key Advantage of Betting Offshore – Tax Requirements & Obligations

As tax day approaches in the United States on April 15, bettors should understand their obligations to the IRS if their winnings have reached a certain threshold during the 2024 calendar year.

Tax Obligations for Bettors

Bettors who have profited at least $600 or more are required to complete Form W-2G. Gambling income, regardless of whether it is reported on Form W-2G, must be declared on Form 1040. This includes winnings from all sources, whether from online sportsbooks, casinos, or other forms of gambling.

Regulated Betting Sites and Tax Documentation

Regulated sportsbooks like FanDuel, DraftKings, and BetMGM provide players with player activity statements, detailing deposits, withdrawals, and net income over the course of the year. 

This documentation allows players to report their earnings accurately when filing taxes and provides the opportunity to deduct gambling losses—but only if they are itemized. Bettors can claim gambling losses up to the amount of their winnings under “Other Itemized Deductions”.

These regulated platforms automatically report player earnings to the IRS, ensuring that bettors remain fully transparent about their gambling activity. For those who value privacy, this can be a significant concern. There have been reports of inaccurate W-2G forms being issued by regulated sportsbooks, causing headaches for bettors. One Reddit user shared their frustration with BetMGM, stating:

“I received an outrageous W2G from BetMGM two weeks ago (filed my taxes back in February and this form came WAY TOO LATE). The W2G didn’t match any of the winnings that I won or supposedly that I won. I have escalated this to BetMGM but they have been USELESS so far. Has anybody had any success with reaching out to their support and getting an explanation or a fix for the W2G? First off one rep said they didn’t send out W2Gs yet and another rep said that they have no escalation for people who want to ask questions about their W2G. What a crazy company. I deleted their app.” 

Offshore sportsbooks do not provide any tax forms and do no automatic reporting to the IRS.

The Privacy Benefits of Betting Offshore

Unlike regulated sportsbooks, offshore sportsbooks provide a higher degree of privacy. These sportsbooks do not issue tax forms and do not automatically report winnings to the IRS, offering a layer of anonymity for players who prefer to keep their betting activity confidential.

Offshore sportsbooks offer several other privacy advantages, including:

• Crypto Transactions: Many offshore sportsbooks accept deposits via Bitcoin and other cryptocurrencies, which add an extra layer of financial anonymity. Crypto transactions are decentralized and harder to trace than traditional bank deposits, making them an appealing option for privacy-conscious bettors.
• No Financial Institution Tracking: Deposits and withdrawals from regulated sportsbooks are visible on bank statements, potentially raising red flags with lenders, mortgage providers, or even employers who scrutinize financial history. Offshore sportsbooks eliminate this concern by offering alternative funding methods that do not leave a paper trail.
• Protection from Civil Matters: Offshore sportsbooks offer a degree of separation between betting activity and legal or civil proceedings. For instance, individuals going through a divorce may not want their gambling winnings to be visible to a spouse who could claim a share. Likewise, those facing potential creditor claims may prefer not to have their betting profits disclosed in financial records.
• Avoiding Unwanted Tax Implications: While each individual is responsible for complying with tax laws, betting with offshore sites allows players to decide when and how they report their winnings, rather than having tax obligations automatically triggered by a regulated sportsbook’s reporting policies.

A Final Word: Know Your Tax Responsibilities

Although offshore sportsbooks provide greater privacy, it remains each bettor’s responsibility to understand the relevant tax laws in their country. Consulting a tax professional is advisable to ensure compliance with IRS regulations while maximizing any potential deductions.

For those who prioritize privacy, financial discretion, and control over their personal betting information, offshore sportsbooks present an attractive alternative to their regulated counterparts.