Az Gambling Tax
For what has seemingly been the entire history of the United States of America, its citizens have had a love affair with gambling. Whether this is a direct result of the legal ambiguity surrounding the hobby or the regulations came into play because the act was so popular is certainly up for debate, but the fact remains that even a responsibly enjoyed gambling hobby lives in a legal gray area all throughout the country. We discuss specifics of Arizona gambling laws to clear up this grey area.
Federal laws that govern the entire country are clear on the subject. When organized crime and racketeering was rampant, laws were passed that restricted the facilitation of many gambling games while leaving mere participants well enough alone. From there, many individual states in the union took it upon themselves to further restrict and regulate gambling acts. The state of Arizona was one such state, and therefore its residents have to pay closer attention to the Arizona gambling laws more than those in other states.
Under Arizona law (ARS § 13, Chapter 33), all 'gambling' is unlawful and subject to criminal penalties unless it falls within a statutory exception.The prohibition against gambling targets the circumstances under which games of chance or skill are played. Reporting Gambling Profits and Loss on Your Taxes Gambling Losses Can Be Deducted on Schedule A. If you itemize your deductions, you can deduct your gambling losses for the year on Schedule A. However, you can only deduct your loss up to the amount you report as gambling winnings. It is, but thanks to the 25 percent federal tax and the 5 percent Arizona tax (make that 6 percent for non-Arizona residents), and you’re handing over millions to the government. Some places in the. Even worse, later on in the legislative document, there is even a punishment outlined for the act of placing any bets or wagers in relation to what the law has already defined as “gambling.” In Arizona, unregulated gambling is defined as a class 1 misdemeanor, which generally carries a $2,500 fine and up to six months in jail.
With that in mind, ArizonaGamblingLaws was created with the aim to help guide Arizona residents through the rocky terrain of their legal landscape concerning gambling as well as to help steer them towards means that will allow them to enjoy an exciting hobby gambling responsibly as safely as possible. Gambling can be both fun as well as potentially profitable, and there is no reason anyone interested in participating should have to miss out.
Legality of Gambling in Arizona: Can You Get In Trouble?
Whereas federal law sees fit to merely regulate the facilitation of gambling, Arizona gambling laws take this principle one step further and goes so far as to define and even criminalize the act of unregulated gambling within its borders. Section 13-3301, heading four defines gambling as “risking or giving something of value for the opportunity to obtain a benefit from a game or contest of chance or skill or a future contingent event.”
First, the bad news. This is, unfortunately, an all-encompassing definition that eliminates all of the popular forms of gambling with unregulated vendors. Even worse, later on in the legislative document, there is even a punishment outlined for the act of placing any bets or wagers in relation to what the law has already defined as “gambling.” In Arizona, unregulated gambling is defined as a class 1 misdemeanor, which generally carries a $2,500 fine and up to six months in jail.
Now for the good news. If an Arizona resident is interested in merely participating in gambling, they will generally be safe from prosecution. In fact, at no point in the history of the state or their legislation has an otherwise honest citizen ever been brought up on charges for merely betting or wagering. This penalty has only been used to add charges up on already established criminals. Just so long as an Arizona resident is not brought in as any sort of a professional criminal, they should remain safe from the arm of the law.
However, this is not to say that all gambling related offenders would be safe in the state of Arizona. In fact, if one is found guilty of “promoting gambling” as defined in chapter 13-3303 in the document is a class 5 felony in the state which can be met with over two years in a state prison. Arizona residents should take extreme care to avoid this act.
Facilitation of Gambling For Profit vs. For Entertainment
Happily, there is a huge difference between these two actions even though they are only separated by one simple word.
The definition of gambling is simple and has already been outlined. Gambling is when one participates in any game or speculation involving a bet or wager. In Arizona, this encompasses betting on sports, betting on any casino table games of chance such as blackjack or roulette, or even wagering on hands of poker.
In order to do this, one will have to find a party willing to take their bet, operate their casino game, or host their poker game. This person would be fulfilling most of the requirements of “promoting” gambling already. The last distinction to make between the two acts is that the party who is hosting the game or taking the bet must also be making a profit off of the gambling activity.
To be clear, making a profit off of the gambling activity does not mean wagering and winning in a playing field where the odds are even. For example, if an Arizona resident is hosting a social poker game in their home and they win a few hands, they are not automatically guilty of “promoting” gambling. Making a profit means that the host of the game is in a position to profit off of gambling even without betting or wagering.
Examples of this include operating any casino game as the “house” (by definition in all table games, the house always has the best odds to win,) operating or maintaining a sportsbook where the offender takes bets from all players and assumes the responsibility of paying out winners, or operating a poker game in which admission is charged for the privilege to play or a “rake” (a small percentage of each hand collected by the house as profit) is collected from the table.
With these parameters clearly established, it would be highly unlikely any Arizona resident could find themselves inadvertently promoting gambling. Taking this into consideration along with the fact that the mere act of gambling is rarely if ever prosecuted and it should be easy to avoid any legal attention via a responsible gambling hobby.
Gambling Laws + Statutes That Affect Arizona Residents
Back in 1992, the Professional and Amateur Sports Protection Act was passed through federal courts. This banned the facilitation of all sports betting, but exempted four states. Unfortunately, Arizona was not one of them. Therefore, there are no leally operating sports betting rings found on land within the state of Arizona, but it’s worth noting that long time senator John McCain is a big proponent of legalizing sports betting on a federal level.
In the meantime, since the laws against sports betting are not heavily enforced in Arizona, thousands of residents are able to enjoy their hobby through the use of legal online sportsbooks that are maintained overseas and carry no legal risks.
According to Arizona gambling laws, the state will not budge in its position against all forms of gambling, including casino games. However, there are several legal casinos within Arizona that are exempt under the Indian Gaming Act. Arizona residents are free to visit these facilities and gamble within their premises, with the understanding that they won’t exactly be standing in the most glamorous halls and lobbies of all time.
Meanwhile, due to the relaxed state of gambling enforcement of the state of Arizona, anyone is free to join the thousands or Arizona residents who already gamble with legal online casinos while running no substantial legal risk.
Due to the extreme popularity of poker and the profitability of state sanctioned poker rooms, many states make an exception for the game of poker by classifying it as a game of skill rather than chance. Arizona is not such a state, and therefore there are no state sanctioned poker rooms.
However, the eyes of the law do not reach into the private homes of Arizona residents. In addition to legal online poker rooms (which while gambling with is technically illegal, is not enforced) the law provides exceptions for social poker games, which is usually the most popular option for playing poker. Granted, residents may not take much money home since high stakes poker games rank among the best way to lose friends, but it’s good to know that Friday night cards and beers are a sacred thing in Arizona.
Arizona Gambling Age: How Old Do I need To Be To Play?
If an Arizona resident reading this page takes one thing away from it, they should take that the legal situation for gambling in their home state is complicated at best. This being the case, they should not want to complicate matters any further by gambling underage.
The legal age to gamble in Arizona is 21, and we strongly recommend all residents wait until they are of that age to take part in gambling. Those found gambling underage will not only be banned from whichever facility they are using for gambling, but will face steep legal fines as well as potential jail time.
| General | Lottery | Casinos | Poker | Pari-Mutuel | Bingo |
|---|---|---|---|---|---|
| 21 | 21 | 21 | 21 | 21 | 18 |
Where to Legally Gamble in Arizona
On-Land: While the Arizona legislature does not allow state sanctioned gambling within their borders, there are a few options for Arizona residents who wish to gamble in a casino environment.
The state is home to several tribal casinos, all which offer slots, a variety of table games, and poker rooms for both sit and go tournaments and scheduled poker tourneys. While these facilities are a bit spread out for a state the size of Arizona, it could be well worthwhile for an afternoon away or a fun weekend of gambling. However, for residents who wish to gamble more regularly for shorter periods of time, they may not be the most practical option.
Online/Web-Based: While unregulated gambling in Arizona is something not permitted by the state, it is cannot be proven when using an operator outside the state located in another country. The need for this is a result of there being a distinct lack of options within the state. This has caused thousands to turn to legal online gambling networks to satisfy their needs.
Since these gambling websites are all established and maintained on foreign territories, they are exempt not only from Arizona gambling law, but from the federal laws that tend to crack down hard on facilities that offer gambling to regular citizens.
While the idea of gambling with a foreign entity may make some Arizona residents nervous, there is no need to fret. Since these gambling sites operate legally in their home country, they must be certified by international gaming commissions. This assures that not only will all of their members receive fair play, but that payouts from these sites will processed legitimately and quickly.
These are legitimate business that have been operating and catering to US clientele for over a decade. In that time they have earned pristine reputations, pages of positive customer testimony, and endorsements from major US media giants like ESPN, FOX, and CBS. These reputations are not earned easily or overnight, but through long years of providing excellent products paired with great customer service.
Best Legal Gambling Site For Arizona Residents
#1 Site For Casino Games, Poker & Sports/Horse Betting
When Arizona residents who are active in the gambling community think safe, legal online gambling, they think of Bovada. This is no mere coincidence or happy accident, this gambling website for Arizona residents has been hard at work providing the best possible sportsbook, poker rooms and digital casinos for over 20 years and in that time they have learned how to operate discretely and how to best serve the interest of clients from Arizona.
For instance, the Bovada gambling network was among the first to realize that Americans carry their most powerful computers around with them in their pocket. This led to the creation of the powerful Bovada mobile site that has yet to be topped in the industry. Now, Arizona residents can play poker, casino games, or bet on sports from anywhere in the world they have a phone signal with no need to interrupt their daily routine or glue themselves to a clunky laptop or desktop computer. Bovada truly has the best needs of the bettor at heart!
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Although we are confident that all of the information on this page is in line with how things really are in relation to Arizona gambling laws, we here at ArizonaGamblingLaws.com admit that we are not lawyers, and have no formal legal training. While we are extremely experienced, we urge readers not to consider this as legal advice and to seek professional council if they are unsure about a particular type of gaming activity. The other option we present is checking the Arizona gambling statutes for yourself by clicking through to www.azleg.gov, which contains the exact language of the laws. It may take a little extra time to decipher the legal jargon, but it is time well spent if it helps you stay safe in your gambling endeavors.
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Do you like to gamble? If so, then you should know that the taxman beats the odds every time you do. The Internal Revenue Service and many states consider any money you win in the casino as taxable income. This applies to all types of casual gambling – from roulette and poker tournaments to slots, bingo and even fantasy football. In some cases, the casino will withhold a percentage of your winnings for taxes before it pays you at the rate of 24 percent.
Casino Winnings Are Not Tax-Free
Casino winnings count as gambling income and gambling income is always taxed at the federal level. That includes cash from slot machines, poker tournaments, baccarat, roulette, keno, bingo, raffles, lotteries and horse racing. If you win a non-cash prize like a car or a vacation, you pay taxes on the fair market value of the item you win.
By law, you must report all your winnings on your federal income tax return – and all means all. Whether you win five bucks on the slots or five million on the poker tables, you are technically required to report it. Job income plus gambling income plus other income equals the total income on your tax return. Subtract the deductions, and you'll pay taxes on the resulting figure at your standard income tax rate.
How Much You Win Matters
While you're required to report every last dollar of winnings, the casino will only get involved when your winnings hit certain thresholds for income reporting:
- $5,000 (reduced by the wager or buy-in) from a poker tournament, sweepstakes, jai alai, lotteries and wagering pools.
- $1,500 (reduced by the wager) in keno winnings.
- $1,200 (not reduced by the wager) from slot machines or bingo
- $600 (reduced by the wager at the casino's discretion) for all other types of winnings but only if the payout is at least 300 times your wager.
Win at or above these amounts, and the casino will send you IRS Form W2-G to report the full amount won and the amount of tax withholding if any. You will need this form to prepare your tax return.
Understand that you must report all gambling winnings to the IRS, not just those listed above. It just means that you don't have to fill out Form W2-G for other winnings. Income from table games, such as craps, roulette, blackjack and baccarat, do not require a WG-2, for example, regardless of the amount won. It's not clear why the IRS has differentiated it this way, but those are the rules. However, you still have to report the income from these games.
What is the Federal Gambling Tax Rate?
Standard federal tax withholding applies to winnings of $5,000 or more from:
Az Gambling Tax Rate
- Wagering pools (this does not include poker tournaments).
- Lotteries.
- Sweepstakes.
- Other gambling transactions where the winnings are at least 300 times the amount wagered.
If you win above the threshold from these types of games, the casino automatically withholds 24 percent of your winnings for the IRS before it pays you. If you cannot provide a Social Security number, the casino will make a 'backup withholding.' A backup withholding is also applied at the rate of 24 percent, only now it includes all your gambling winnings from slot machines, keno, bingo, poker tournaments and more. This money gets passed directly to the IRS and credited against your final tax bill. Before December 31, 2017, the standard withholding rate was 25 percent and the backup rate was 28 percent.
The $5,000 threshold applies to net winnings, meaning you deduct the amount of your wager or buy-in. For example, if you won $5,500 on the poker tables but had to buy in to the game for $1,000, then you would not be subject to the minimum withholding threshold.
It's important to understand that withholding is an entirely separate requirement from reporting the winning on Form WG-2. Just because your gambling winning is reported on Form WG-2 does not automatically require a withholding for federal income taxes.
Can You Deduct Gambling Losses?
If you itemize your deductions on Schedule A, then you can also deduct gambling losses but only up to the amount of the winnings shown on your tax return. So, if you won $5,000 on the blackjack table, you could only deduct $5,000 worth of losing bets, not the $6,000 you actually lost on gambling wagers during the tax year. And you cannot carry your losses from year to year.
Az Gambling Taxes
The IRS recommends that you keep a gambling log or spreadsheet showing all your wins and losses. The log should contain the date of the gambling activity, type of activity, name and address of the casino, amount of winnings and losses, and the names of other people there with you as part of the wagering pool. Be sure to keep all tickets, receipts and statements if you're going to claim gambling losses as the IRS may call for evidence in support of your claim.
What About State Withholding Tax on Gambling Winnings?
There are good states for gamblers and bad states for gamblers. If you're going to 'lose the shirt off your back,' you might as well do it in a 'good' gambling state like Nevada, which has no state tax on gambling winnings. The 'bad' states tax your gambling winnings either as a flat percentage of the amount won or by ramping up the percentage owed depending on how much you won.
Each state has different rules. In Maryland, for example, you must report winnings between $500 and $5,000 within 60 days and pay state income taxes within that time frame; you report winnings under $500 on your annual state tax return and winnings over $5,000 are subject to withholding by the casino due to state taxes. Personal tax rates begin at 2 percent and increase to a maximum of 5.75 percent in 2018. In Iowa, there's an automatic 5 percent withholding for state income tax purposes whenever federal taxes are withheld.
State taxes are due in the state you won the income and different rules may apply to players from out of state. The casino should be clued in on the state's withholding laws. Speak to them if you're not clear why the payout is less than you expect.
How to Report Taxes on Casino Winnings
You should receive all of your W2-Gs by January 31 and you'll need these forms to complete your federal and state tax returns. Boxes 1, 4 and 15 are the most important as these show your taxable gambling winnings, federal income taxes withheld and state income taxes withheld, respectively.
You must report the amount specified in Box 1, as well as other gambling income not reported on a W2-G, on the 'other income' line of your IRS Form 1040. This form is being replaced with a simpler form for the 2019 tax season but the reporting requirement remains the same. If your winnings are subject to withholding, you should report the amount in the 'payment' section of your return.
Different rules apply to professional gamblers who gamble full time to earn a livelihood. As a pro gambler, your winnings will be subject to self-employment tax after offsetting gambling losses and after other allowable expenses.