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Taxes

• The current threshold for 2026 tax year for issuing 1099-MISC is $2000 as a result of Trump's One Big Beautiful Bill Act which raised it from $600. Each tax year this figure will continue to rise in accordance with inflation. Betting platforms like DFS operators and sweepstake sportsbooks which potentially issue 1099-MISCs may still on their websites or in customer support reference this old $600 threshold but trust that by February 2027 these platforms will 100% be using the $2000 threshold.
• Online sports gambling — whether through state-regulated sportsbooks/DFS or sweepstakes/social sportsbook platforms — operates within regulated financial systems that require full KYC (Know Your Customer) identity verification, typically including your legal name, date of birth, address, and often your Social Security number before withdrawals. As a result, there is a clear digital paper trail linking you to the platform and your transactions. However, unless a reportable tax form (such as a W-2G or 1099-MISC) is generated and sent to the IRS, the federal/state government will not be aware that you engaged in any gambling activity. Similarly, standard ACH deposits to and withdrawals from state regulated or sweepstakes platforms are processed like ordinary bank transfers and do not trigger IRS notifications (i.e. a 1099-K tax form) simply because the transaction involves a gambling operator -- frequency or sizes of these bank transfers do not change this fact.
• Traditional sportsbooks (i.e. DraftKings, BetMGM, Fanatics, etc.) will not report net winnings. Instead, they will only issue a Form W-2G for individual wagers that net at least $2000 and payout at least 300 times the wager amount. In practice, this type of enormous longshot wager will require a near impossible parlay hitting, a wager that a promo hunter would never get anywhere close to.
• If you are taking advantage of a new-user customer promotion on a Pick'em platform (i.e. PrizePicks, Underdog, Chalkboard, etc.) a 1099-MISC tax form will be issued if you have net earnings in a calendar year of at least $2000. Simply arbitraging wagers that exploit new user promotions and the free picks new customers receive, will not lead to netting anywhere close to $2000. Hence, this should not be a concern at all.
• Platform-funded sweepstakes/social sportsbooks (i.e. Fliff, Onyx, Thrillzz, etc) where you purchase virtual coins that can be wagered and then redeemed for cash, are supposed to issue a 1099-MISC if you redeem at least $2000 in a calendar year. With that said, these sites in practice tell their customers they use a net formula. Further, in my experience, even if you fly past the net threshold, they still send you zero tax documents. Platform-funded sweepstakes/social sportsbooks are able to operate by using the legal loophole of being a sweepstakes operator. Purchases on these platforms include a ton of worthless coins along with a bonus of site credit virtual cash. This virtual cash (always after 1x playthrough) is redeemable for a prize redemption at a 1:1 US dollar rate. It is conceivable then that when a sweepstakes sportsbook issued a 1099-MISC, they would report gross redemption as all the money spent by the customer is unrelated to a prize they are awarding. Users of course would hate this interpretation and rightly should, which is why it not surprising that operators would try to justify reporting based on a user's actual net profit. Since the IRS has stayed silent on the entire concept of sweepstakes operators and is not on top of forcing these companies to even issue tax forms, the future is nebulous. So, for the sake of being careful, you may want to avoid crossing the $2000 threshold, especially at least in terms of net winnings. Luckily, maximizing the value of any of these new user promotions will not get someone past these thresholds.
• Peer-to-peer sweepstake style social sportsbook operate similarly in terms of the packages of virtual coins to the platform counter, except instead of making bets against the platform, these sportsbooks act like financial exchanges where different users are betting against each other. For this reason, the markets are incredibly tight with NoVig leading the way far beyond any other platform because they charge zero commissions. In terms of how and at what threshold they report 1099-MISCs, interpretation is once again key since there is no official IRS guidance. However, this interpretation is incredibly regarding net winnnings vs gross redemptions will impact your betting experience. Given the exchange design, these platforms are often the ideal place to make a hedge bet, which can lead to large and frequent bets being place on them. Therefore, while utilizing their new user promotions will not get you anywhere close to a $2000 redemption, hedging bets made while utilizing new user promotions on other platforms, certainly can. With that warning, the net profit calculation is almost certainly what these sites will try to argue on the off chance they even generate tax forms.
• CFTC regulated prediction markets like Kalshi are relatively new to the U.S. which is why things can certainly change, but as of now, these platforms will not generate any tax documents on your trading activity, leaving it 100% in your hands to report. In fact, Kalshi and Polymarket are the two biggest examples of what are open market prediction exchanges, where users can place bids and offers and trade directly against one another, with prices determined by supply and demand -- NoVig does the same thing but they employ the use of virtual currency. Meanwhile platforms like DraftKings Predictions and OG Predtions are also CFTC regulated prediction markets but appear more like house-run prediction products, but that is primarily because users are only allowed to act as takers. Behind the scenes, liquidity is generally provided by a market maker posting quotes, meaning the contracts are still exchange-traded, even though users cannot submit their own bids and offers to make markets themselves.