Online poker has become a popular form of entertainment and income in the United States. With platforms offering competitive games, tournaments, and real money prizes, many players are now wondering how their winnings are treated by the Internal Revenue Service (IRS). Whether you’re a recreational player or a professional grinder, understanding your tax obligations is essential.
Is Online Poker Legal in the United States?
The legality of online poker varies by state. As of 2025, states like New Jersey, Pennsylvania, Michigan, Nevada, and Delaware allow regulated online poker. However, players in other states often use offshore platforms or social poker rooms. Regardless of where you play, if you’re a U.S. citizen or resident, your winnings are taxable.
Tax Status: Hobby vs. Profession
The IRS distinguishes between hobbyists and professional gamblers. This classification impacts how you report your income and whether you can deduct expenses.
| Criteria | Hobby Player | Professional Player |
|---|---|---|
| Tax Form | Form 1040 (Other Income) | Schedule C (Business Income) |
| Deducting Expenses | No | Yes, if necessary and ordinary |
| Self-Employment Tax | No | Yes (15.3%) |
| Consistency | Occasional Play | Frequent, Profit-Oriented Play |
How to Report Online Poker Winnings
All gambling winnings, including from online poker, must be reported as income. This applies whether the platform is licensed in the U.S. or offshore. If you win $600 or more from a single poker tournament, you may receive a Form W-2G from the site, but you’re obligated to report all winnings, even if you don’t receive a form.
Deducting Gambling Losses
You may deduct losses up to the amount of your winnings, but only if you itemize deductions. This means hobby players cannot deduct more than they win, and they need to keep accurate records of losses (e.g., tournament entries, buy-ins).
Records You Should Keep
- Dates of play
- Locations (online platform or physical casino)
- Buy-in and cash-out amounts
- Net profit or loss for each session
- Bank statements or payment processor histories
Do Offshore Poker Sites Report to the IRS?
Offshore poker sites do not issue W-2G forms and typically do not report player winnings to the IRS. However, this does not exempt you from reporting your income. You are still legally responsible for declaring all poker-related earnings on your federal tax return.
What About State Taxes?
Most U.S. states with income tax also tax gambling winnings. This includes online poker profits. Make sure to check your state’s specific rules. Some states allow deductions for gambling losses while others do not.
Filing Tips for Online Poker Players
- Use tax software that includes gambling income fields.
- If you play regularly, consult a CPA who understands gambling income.
- Keep screenshots or export spreadsheets from your poker accounts.
- Consider forming an LLC if you play full-time to manage expenses and taxes.
IRS Red Flags for Poker Players
- Reporting large gambling income without backing records
- Claiming professional status without consistent income
- Unreported foreign accounts (must be disclosed if >$10,000 held)
Comparison of Tax Treatment by Country
| Country | Tax on Poker Winnings | Notes |
|---|---|---|
| United States | Yes | Taxed as income, based on hobby/pro status |
| United Kingdom | No | All gambling winnings are tax-free |
| Germany | Yes | Inconsistent; long-term pros often taxed |
| Canada | No (Generally) | Unless considered business income |
Conclusion
Understanding your tax responsibilities as an online poker player in the U.S. is crucial. The IRS expects full disclosure, and failure to comply can result in penalties. Whether you play occasionally or grind daily, proper record-keeping and tax planning can save you a lot of stress come April. If you’re just getting started, there are many platforms to explore. For example, you can Start to play Ton Poker and familiarize yourself with gameplay, bankroll management, and potential tax impacts early on.