Do sports betting sites issue a W-2G?

Traditional sportsbooks may issue a W-2G for certain large winning wagers, but most promo hunters never hit those reporting thresholds.

Do sportsbooks issue a 1099-MISC?

Some DFS and sweepstakes platforms may issue a 1099-MISC when you cross their stated earnings or redemption thresholds.

Do betting deposits and withdrawals create a 1099-K?

Normal deposits and withdrawals are usually processed like bank transfers and do not automatically create a 1099-K just because they involve a betting platform.

Why do most promo hunters not receive tax forms?

Many new-user promotion setups do not reach the specific thresholds that trigger W-2G or 1099 reporting, so no form is issued in practice.

Tax Obligations and Compliance

Everything you need to know about online sports betting taxation and why you should not worry

Summary

All gambling winnings are legally taxable, even if you do not receive a tax form
Online sports bettors taking advantage of new-user promotions will almost certainly never receive a gambling-related tax form. As such, the vast majority of Americans do not report online sports gambling winnings.
The IRS is not currently interested in enforcing the taxation of sports betting. The rules surrounding this activity's taxation remain unsettled and IRS guidance is limited in several important areas

As I, someone who is not a tax professional and thus cannot give formal tax advice, researched how taxation for online sports gambling worked, my original goal was to learn the fine details on how sports gambling winnings and losses are taxed. The deeper I looked, however, the more I realized that many important questions remain unresolved. In several areas, the IRS has provided little or no meaningful guidance. Combined with the rapid growth of online sportsbooks, DFS operators, sweepstakes platforms, and prediction markets, this has created a lot of confusion. In practice, the lack of guidance is less important than it might seem, because sports bettors usually do not receive tax forms tied to their betting activity, so many people never report any income in the first place. This is a policy choice of the IRS, not an administrative oversight. Below are the specific reasons why new-user promo hunters are unlikely to receive any tax forms despite signing up for many different sports betting platforms:

Reporting thresholds

The current 2026 threshold for issuing a 1099-MISC or a W-2G is $2,000. That figure will continue to rise with inflation each year.

Platform-Specific Reporting

Traditional Sportsbooks

Traditional sportsbooks, such as DraftKings, BetMGM, and Fanatics, do not report net winnings. Instead, they issue a Form W-2G only for individual wagers that win at least $2,000 and pay at least 300 times the wager amount. A wager large enough to trigger that form requires an extremely unlikely parlay, which a promo hunter would never make, to hit.

DFS Platforms

DFS pick'em platforms such as PrizePicks, Underdog, and Chalkboard issue a 1099-MISC when net earnings reach at least $2,000 in a calendar year. Exploiting a new-user promotion and occasional free picks will not get a promo hunter anywhere close to this threshold.

Platform-funded Sweepstakes Platforms

Platform-funded sweepstakes sportsbooks, such as Fliff, Onyx, or Thrillzz, are supposed to issue a 1099-MISC if you redeem at least $2,000 in a calendar year. These platforms are able to operate by using the legal loophole of being a sweepstakes operator. Purchases on these platforms involve a bundle of worthless coins and a bonus of site-credit virtual cash. This virtual cash, after 1x playthrough, is redeemable for a prize at a 1:1 US dollar rate. It is conceivable that when a sweepstakes sportsbook issues a 1099-MISC, it could report gross redemption, since the money spent by the customer is unrelated to the prize being awarded. With the IRS silent on the entire concept of sweepstakes operators, general practice by these operators has been to issue a tax form based on net winnings if the gross redemption threshold is exceeded. Luckily, crossing the $2,000 redemption threshold on these platforms will not happen from maximizing value from new-user promotions.

Peer-to-Peer Sweepstakes Platforms

Peer-to-peer sweepstakes sportsbooks operate in the same manner as platform-funded sweepstakes sportsbooks, except that, instead of making bets against the platform, these sportsbooks act like financial exchanges where different users are betting against each other. Extracting value purely from their new-user promotions will not get you past the $2,000 gross redemption threshold. It should also be noted that many of the popular peer-to-peer sweepstakes sportsbooks have transitioned into prediction markets.

Prediction Markets

CFTC-regulated prediction markets are relatively new to the U.S. and for the time being will not generate any tax documents on your trading activity, leaving it 100% in your hands to report. Kalshi, Polymarket, and Novig are some of the biggest examples of open-market prediction exchanges, where users place bids and offers directly against one another, letting prices be determined by supply and demand. Meanwhile, platforms like DraftKings Predictions and OG Predictions are also CFTC-regulated prediction markets, but they look more like house-run products because users are only allowed to act as takers. Behind the scenes, liquidity is always provided by a market maker posting quotes, so the contracts are still exchange-traded even though users cannot submit their own bids and offers.