On this page 5 sections
The IRS makes clear that all gambling winnings are taxable and must be declared on a return. However, how cash-free perks like room credits and free play slot time land on a returns is a murky question, and it may depend on the generosity of the award and the specifics of how you obtained it.
Under the Internal Revenue Code, section 61(a), “gross income” includes winnings from wagering transactions, and both an IRS Tax Topic statement and reminders from the agency have made clear: gambling winnings are taxable income and must be reported. At the same time, section 165(d) limits wagering-loss deductions and setoffs to the amount of wagering gains, dollar-for-dollar.
The real-money shortlist for US players
Ranked on the size of the welcome package, the cashier and how long the operator has served US players. We earn a commission when you sign up — it never changes the order.
- 1
Las Atlantis280% up to $2,800 on each of first 5 deposits (up to $14,000)Crypto cashierServing US players since 2020Claim offerRead our review - 2
El Royale230% match on first depositCrypto cashierServing US players since 2020Claim offerRead our review - 3
SuperSlots400% up to $4,000100 free spinsCrypto cashierServing US players since 2020Claim offerRead our review - 4
Red Dog200% up to $8,000 over 4 depositsCrypto cashierServing US players since 2019Claim offerRead our review - 5
Bovada125% up to $3,750 across your first three depositsSportsbookPoker roomCrypto cashierServing US players since 2011Claim offerRead our review - 6
Ignition300% up to $3,000 split between casino and pokerPoker roomCrypto cashierServing US players since 2016Claim offerRead our review - 7
BetUS250% up to $5,000SportsbookCrypto cashierServing US players since 1994Claim offerRead our review - 8
Cafe300% up to $2,000 + 150 free spins over three days150 free spinsCrypto cashierServing US players since 2016Claim offerRead our review
21+ only. Gambling should stay entertainment — never a way to make money. If it stops being fun, call 1-800-GAMBLER. State law decides what is available where you live; check your own rules before you deposit.
So where do casino comps and loyalty rewards fall in this income/loss framework?
The Hard Rule: Winnings Are Income
The IRS take on gambling is clear: The agency says taxpayers must report all gambling winnings as income, on their tax return. These winnings include anything received for playing a game of chance, including not just cash winnings but also the cash equivalent of casino chips or related prizes: TVs, jewelry, or trips.
The IRS also reminds all taxpayers that gambling losses are deductible, but only up to the amount of gain. So if the player won $1,000 at slot machines, they can’t deduct a loss of $1,500; the loss deduction is capped once a win is in hand.
The Clear Taxable Items: Big Awards
If a casino will hand out a Rolls Royce or $15,000 in jewelry to a lucky gambler, an IRS field service advice memo stated that these prizes and awards to a gambler are taxable as gross income under Internal Revenue Code sections 61(a) and 74.
More to the point, the IRS says income from comps cannot be treated as “gains from wagering transactions” to offset wagering losses under Code 165(d). In a nutshell: The winnings are treated as income, but the winnings loss does not count as a loss or expense under the game-play rules.
The Gray Zone: Ordinary Perks
While the IRS has squarely ruled on the Rolls Royce and jewelry as taxable, treatment of ordinary gambling perks -- bonuses given to frequent players -- is an unsettled area. The taxpayer won't find them treated under the IRS rules on trip and entertainment expenses, as an adjustment to the price of gambling. Everyday comps, according to a summary by a tax-practitioner summary, include rooms, meals, show tickets, and tier benefits, but they generally are not reported as income.
Cash back offers or free-play credits might land differently. These benefits are player-specific and not tied to staying and dining in the casino. A 1996 Tax Court case, Libutti v. Commissioner, reportedly held casino comps as wagering gains, but only practitioner summaries are available. Other chance-free offers, such as a player's first two nights on the casino's dime, might well draw a different ruling if reviewed, because they are not tied to slot play and sit as pure cash bonuses.
Free Play and Promotional Credits
Free play is a more interesting case. The perks themselves are generally not treated as cash. Winnings from free play, though, must be reported as gambling winnings, and a player must be savvy to separate the free-play win from the play amount itself. A promotional or no-deposit bonus from a casino is more straightforward — it is treated as a straight cash bonus, and not as a form of compensation.
Comps and Winnings on a Tax Return
So if that is the line between a taxable and nontaxable item, what must a frequent gambler report on their return? In this tax season, as every one, the player must report all slot, poker, and table-game winnings. These may be reported as gambling winnings, or may be reported grossed into taxable income as wagering gains, but the winnings from play are the bottom line.
And then sit with this, the player must include the cash equivalent of non-cash prizes in the same line. So if the IRS ultimately rules that a two-night stay counts as a “prize” and award, its cash value, as affirmed by the hotel’s rack rate for high game time, goes on your return.
In short, the winnings at high-dollar places like a Las Vegas casino are as taxable as the money in a paycheck, and nontaxable comps are as taxable as Christmas bonuses given by an employer to an employee, already in cash.