Two kinds of withholding, never both
“There are two types of withholding on gambling winnings: (a) regular gambling withholding at 24% (31.58% for certain noncash payments), and (b) backup withholding that is also at 24%. If a payment is already subject to regular gambling withholding, it isn’t subject to backup withholding” (Instructions for Forms W-2G and 5754, Rev. January 2026). Regular withholding is a function of the size of the proceeds and the kind of game; it applies whether or not the winner gives a TIN. Backup withholding is a function of the missing TIN; it applies only to winnings that are reportable but not subject to regular withholding. Both are reported in box 4 and on Form 945, and both come out of the payout before the winner leaves.
The reporting thresholds by game and year
For payments made after 2025, P.L. 119-21 raised the section 6041 reporting threshold from $600 to $2,000, indexed from 2027, and the W-2G instructions now state one figure: “The minimum threshold amount for payments made in calendar year 2026 is $2,000.” Proposed regulations published April 17, 2026 (REG-113229-25) rewrite Treas. Reg. 1.6041-10 to replace the $1,200 bingo and slot machine and $1,500 keno amounts with “the dollar threshold in effect for the calendar year under section 6041(a) and (h),” keeping the rule that bingo and slot winnings are measured “without reduction for the amount wagered” and keno “reduced by the amount wagered on the same keno game,” for payments on or after January 1, 2026; the preamble adds that “because this is a change in the statute, these dollar thresholds apply regardless of these proposed regulations.”
| Game | Paid in 2025 or earlier | Paid in 2026 | Measured | 300-to-1 test |
|---|---|---|---|---|
| Horse and dog racing, jai alai, other parimutuel wagers | $600 | $2,000 | Payment | Yes |
| Sweepstakes, wagering pools, lotteries, raffles | $600 | $2,000 | Payment (net of wager at payer’s option) | Yes |
| Sports wagering | $600 | $2,000 | Payment | Yes |
| Bingo | $1,200 | $2,000 | One game, not reduced by wager | No |
| Slot machines | $1,200 | $2,000 | One play, not reduced by wager | No |
| Keno | $1,500 | $2,000 | One game, net of the wager on it | No |
| Poker tournaments | $5,000 | $5,000 | Net of buy-in, per tournament | No |
The 300-to-1 test compares the proceeds (winnings minus wager) with the wager. The poker figure comes from Rev. Proc. 2007-57; the 2026 instructions no longer print it, referring instead to “the applicable reporting threshold,” and the proposed regulations do not mention poker, so the calculator keeps $5,000 and says so. The 2027 figure, the first indexed one, arrives in the fall 2026 revenue procedure; the threshold lookup and the 2027 page will carry it.
Regular gambling withholding
“Withhold at the 24% rate if the winnings minus the wager are more than $5,000 and are from: Sweepstakes; Wagering pools; Lotteries; Wagering transactions in a parimutuel pool with respect to horse races, dog races, or jai alai, if the winnings are at least 300 times the amount wagered; or Sports wagering and other wagering transactions, if the winnings are at least 300 times the amount wagered.” Two details matter. It “is figured on the total amount of gross proceeds (the amount of winnings minus the amount wagered), not merely on the amount in excess of $5,000.” And it “doesn’t apply to winnings from bingo, keno, or slot machines,” however large, nor to poker tournament winnings when the W-2G is filed and furnished. Installments of $5,000 or less are still withheld on when the total proceeds from the wager will exceed $5,000, and an annuity payer, such as an insurance company paying a lottery prize, withholds on each payment.
Backup withholding at the cage
“You should backup withhold if: The winner doesn’t furnish a correct taxpayer identification number (TIN), Regular gambling withholding hasn’t been withheld, and The winnings meet or exceed the applicable reporting threshold and (if applicable) are at least 300 times the wager.” The base is “the total amount of the winnings reduced, at the option of the payer, by the amount wagered. The total amount, not just the payments in excess of the applicable reporting threshold, is subject to backup withholding.” For poker the instructions say to withhold “on the full amount of the winnings from the tournament.” Form W-2G is the one information return where the TIN is collected in person before the money moves, which is why the gaming page treats the cage as the compliance point: a winner who will not give an SSN is paid net of 24%, and the W-2G reports both. The backup withholding regulations and the backup withholding calculator cover the general rule.
A race track that takes the TIN and then skips the W-2G to keep a customer betting does not escape by avoiding withholding. Chief Counsel noted in 1995 that the intentional disregard penalty under IRC 6721(e) and 6722(c) applies, without the annual cap, when the failure to file or furnish is deliberate (PMTA 00035). The current figure is 10% of the amount that should have been reported.
Noncash prizes
For a car or trip won in a sweepstakes, wagering pool or lottery, “If the FMV exceeds $5,000, after deducting the price of the wager, the winnings are subject to 24% regular gambling withholding.” Either “The winner pays the withholding tax to the payer. In this case, the withholding is 24% of the FMV of the noncash payment minus the amount of the wager,” or “The payer pays the withholding tax. In this case, the withholding is 31.58% of the FMV of the noncash payment minus the amount of the wager,” and under the second method “enter the sum of the noncash payment and the withholding tax in box 1 of Form W-2G and the withholding tax paid by the payer in box 4.” The 31.58% is 24% grossed up (0.24 / 0.76), so the tax the payer absorbs is itself treated as winnings.
Identical wagers and shared tickets
“Winnings from ‘identical wagers’ are added together for purposes of reporting and withholding requirements. Two or more wagers are identical wagers if they are placed with the same payer and winning depends on the occurrence (or non-occurrence) of the same event or events,” and for racing and jai alai they must also be in the same parimutuel pool. The additional winnings go in box 7. Separately, “All wagers in horse racing, dog racing, or jai alai placed in a single parimutuel pool and represented on a single ticket are aggregated and treated as a single wager” for the amount of the wager, which lowers the 300-to-1 ratio for a multi-horse ticket. When a group shares a ticket, “the total amount of the winnings (minus the amount wagered) will determine the amount of the proceeds for purposes of reporting and withholding. Do not allocate winnings to each winner before determining whether the withholding or reporting thresholds were reached”; the person paid gives you Form 5754 listing the winners, and you issue a W-2G to each. The instructions’ example: a $1 ticket shared by two people wins $5,002, so 24% of $5,001 is withheld and two Forms W-2G are prepared.
Boxes 1, 4, 9, 11 and 12
- Box 1 is the reportable winnings: the payment for racing, sports and sweepstakes (at least the threshold and 300 times the wager), the one-game or one-play amount for bingo and slots, the one-game amount net of its wager for keno, the net amount after the buy-in for poker. The optional aggregate method lets a casino put a patron’s same-“gaming day” slot, bingo or keno wins on one form, with the day defined as a 24-hour period ending at a fixed time and closing at 11:59 p.m. on December 31 (Regulations section 1.6041-10(g)).
- Box 4 is whatever was withheld, regular or backup.
- Box 9, the winner’s TIN, “is required information.” A W-2G furnished to the winner carries the full TIN; truncation is not permitted on this form.
- Boxes 11 and 12 carry the numbers from “two forms of identification, one of which must include the payee’s photo,” for racing, sweepstakes, bingo, keno, slots and sports; a signed, unmodified W-9 counts as the non-photo document, state lottery payees are exempt, and a tribal gaming establishment may waive the photo for members presenting its tribal ID. For a poker tournament the instructions list a driver’s license, Social Security card or voter registration.
- Box 2 is the date of the winning event, not the date paid; a lottery annuity is reported each year as paid.
Questions people ask
Did the slot machine threshold really move from $1,200 to $2,000?
Yes, for payments after December 31, 2025. The statute (P.L. 119-21) raised the section 6041 amount, the January 2026 instructions state $2,000 for 2026, Publication 1099 (2026) lists W-2G at “generally $2,000 or more,” and REG-113229-25 proposes conforming the regulation. The amount is indexed from 2027.
The winner refused to give a Social Security number. Can we still pay?
Yes. Pay net of 24% backup withholding on the winnings (or winnings less the wager, your option), report the winnings and the tax on the W-2G, and deposit the tax under Form 945. If the winnings are large enough for regular gambling withholding, that 24% applies instead and the missing TIN changes nothing about the amount.
Is Form W-2G in the IRS TIN Matching program?
No. TIN Matching covers the 1099 series subject to backup withholding under section 3406; W-2G is not among the forms the program accepts. Casinos verify at the cage with identification and many use a third-party real-time check. The TIN format checker catches the obvious errors.
Does a winner’s loss on other bets reduce the reportable amount?
No. “Winnings and losses from other wagering transactions aren’t to be taken into account when determining the applicable reporting threshold.” Each game, play or wager (with identical wagers combined) stands alone.
What if a tax-exempt organization runs the raffle?
The same rules apply: “The requirements in this section apply to church raffles, charity drawings, etc.” A $5,000-plus prize from a $100 ticket is withheld on at 24% of the proceeds, and the organization files Form 945. Publication 3079 covers exempt-organization gaming.