Gambling and Lottery Winnings
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- Taxes on Gambling and Sports Betting: What You Need to Know
- Sports Betting Taxes | Guide for Gambling Tax on Winnings
Does online sports betting earning qualify as taxable income?
Not quite sure this is the right subreddit, not sure where this should go. submitted by teradart to PersonalFinanceCanada [link] [comments]
I'm a university student who has recently been taking advantage of a combination of matched and arbitrage betting on primarily English betting sites such as William Hill, Bet365 etc. These bets take place in the UK, so they're legal, for anyone wondering. I'm not making much money off it, only around $200-$300/month, but it's something.
My question is, do these earnings count as income and are they taxable?
[USA] Do virtual items have legal value?
submitted by thesavagemonk to legaladvice [link] [comments]
Some of you may be familiar with eSports, and you may know that recently betting on esports has become extremely popular. In one day during the XGames Counter-strike: Global Offensive tournament, $4.5 million dollars worth of virtual goods were bet on matches.
I'll go into a little more detail here for those who don't know what I'm talking about: Counter-strike: Global Offensive is a popular first-person shooter that is played in tournaments across the world. CS:GO is a game created by Valve, and one of it's "unique" features is the ability to purchase, trade, and sell "skins" for your weapons. Skins are like paint schemes for weapons.
Skins are primarily sold and bought through the Steam Market. There is no sale or purchase from/to Valve, everything is done user to user. The Steam Market allows users to list items for sale at any price, and Valve takes a percentage of the profits of any sale. The Steam Market, however, does not use real money, it uses Steam Wallet money. You can deposit real money into your Steam Wallet ($1USD = $1) but you can't withdraw it, and it can only be used to buy games or Steam Market items once it's in the wallet.
Skins range from $0.04 to hundreds of dollars based on their rarity. While most transactions occur through the Steam Market, some people choose to use Paypal or similar to purchase the items directly from other users. Trading skins for skins is also easily accomplished through the Steam interface.
With the development of the website CSGOLounge.com, people are able to place bets on professional matches with skins. They trade their skins to the website, and when the match is over they receive their skins plus winnings if they win the bet. Value is assigned to a skin by taking the sale price from the Steam Market.
Betting has come under scrutiny recently due to a handful of professional players throwing matches while betting on themselves.
A big question seems to be whether skins would have any value in a court of law.
Some people think that because Steam's TOS state that virtual items have no value and Steam Wallet money has no real world value:
You may use Steam Wallet funds to purchase Subscriptions, including by making in-game purchases where Steam Wallet transactions are enabled. Funds added to the Steam Wallet are non-refundable and non-transferable. Steam Wallet funds do not constitute a personal property right, have no value outside Steam and can only be used to purchase Subscriptions and related content via Steam (including but not limited to games and other applications offered through the Steam Store, or in a Steam Subscription Marketplace). Steam Wallet funds have no cash value and are not exchangeable for cash. Steam Wallet funds that are deemed unclaimed property may be turned over to the applicable authority. that if a case ever went to court where hundreds of dollars of skins were lost, that the court would throw it out because they are virtual items with no value.
This seems ridiculous to me. If thousands of people agree that something is worth some amount of money, it's reasonable to assume that court would agree right? Especially with the Steam Market showing a history of transactions for roughly that price?
Even Steam says that your "earnings" in Steam Wallet are taxable:
If you complete a trade, sale or purchase in a Subscription Marketplace, you acknowledge and agree that you are responsible for taxes, if any, which may be due with respect to your transactions, including sales or use taxes, and for compliance with applicable tax laws. Proceeds from sales you make in a Subscription Marketplace may be considered income to you for income tax purposes. You should consult with a tax specialist to determine your tax liability in connection with your activities in any Subscription Marketplace. There may not be a clear cut answer here, and that's fine. I'm just curious, since many people seems so adamant that these skins have no value.
Keep in mind though that a bet winnings tax applies to online sports betting. In 2018, sports betting became legal in New Jersey under Governor Phil Murphy. As a result, bet winnings are now subject to the New Jersey Gross Income Tax. Sports betting taxes apply to all institutions and all bet winnings are taxable and need to be reported. Reporting your sports betting winnings is easy if you’re just a regular casual sports bettor. There are two forms you’ll need to complete to report your gambling activity: Form 1040 and Schedule A. On Tax Form 1040, simply total your sports betting winnings and put that figure in the “Other Income” spot. This is line 21 of form 1040. For many of us, gambling means buying the occasional lottery ticket on the way home from work, but the Internal Revenue Service says that casual gambling also includes raffles, casino games, poker, sports betting—and, yes, even fantasy football. When you win, your winnings are taxable income, subject to its own tax rules. Gambling and Lottery Winnings Class of Income. Gambling and lottery winnings is a separate class of income under Pennsylvania personal income tax law. See 72 PA C.S. §7303(a)(7). Between July 21, 1983 and Dec. 31, 2015, all prizes of the Pennsylvania Lottery were excluded from this class of income. The IRS has always considered gambling winnings taxable income, and it expects you to report all your taxable income — even the money you win betting on sports. If you’ll be reporting gambling winnings on your federal income tax return, or hoping to write off some gambling losses, be sure to keep detailed records of your wagers and losses.