• Maryland State Gambling Tax Penalties
• Maryland State Gambling Tax Forms

For prizes of $5,001 or more, the Lottery is required by law to deduct the following taxes from your winnings:. 24% federal tax;. 8.95% state tax if you are a Maryland resident, or;. 8% state tax if you are not a Maryland resident. In addition, Lottery winnings must be reported as income when you file your tax return. The Maryland income tax has eight tax brackets, with a maximum marginal income tax of 5.75% as of 2020. Detailed Maryland state income tax rates and brackets are available on this page.

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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:

• 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.

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.

Read More:

• Year Maryland Regulated Gambling: Racing (1870), Lottery (1972), Bingo (1952), Casinos (2008)
• Estimated Tax Revenue from Gambling: $900 million
• Estimated Gambling Revenue: $2.8 billion
• Maryland Gambling Age: Bingo, racing and lottery: 18 Casinos: 21
• Smoking ban: Smoking is not permitted in any indoor businesses in Maryland.
• Maryland Online gambling: Horse racing

While Maryland casinos were legalized later than other states in the region, is has no aversion to gambling. Horse racing dates back to the 19^th Century. The regulation was originally left up to the city governments before pari-mutuel betting went online early in the 20^th Century. The state permits charities to offer bingo and other games of chance.

Maryland casinos were not approved until 2008. Resort casinos and some racetracks may offer Atlantic City style gambling.

Paying Gambling Taxes in Maryland

Do you have to pay taxes on your gambling winnings? OnlineUnitedStatesCasinos has gathered everything you need to know about paying taxes straight from a Certified Public Accountant. For more information please visit our exclusive Gambling Taxes article.

Maryland Casinos Map & Guide

• Rocky Gap Casino
• Horseshoe Casino
• Hollywood Casino
• Maryland Live!
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Types of Maryland Online Gambling Allowed

There are two forms of legal Maryland online gambling. Off-track horse racing is permitted on apps and registered websites. The main companies that accept this type of pari-mutuel action are TVG, XpressBet, and TwinSpires.

Maryland wanted to legalize fantasy sports by the end of 2015, but was repealed by state legislation in 2016. The state adopted language in the federal Unlawful Internet Gambling Enforcement Act that exempts fantasy sports. This is thought to give the green light to daily fantasy sports sites like DraftKings, FanDuel, Yahoo!, and CBS Sports. Even the most conservative daily fantasy sites accept players from Maryland.

Types of Live Maryland Gambling

• Slots: Yes
• Blackjack: Yes
• Poker: Yes
• Craps/Roulette: Yes
• Horses: Yes
• Lottery: Yes

Horse racing is the oldest form of Maryland gambling. There were once six tracks in the state. There are now just two that offer scheduled races with pari-mutuel betting. They are Pimlico Race Course and Laurel Park. Pimlico is home to the Preakness race, which is part of the Triple Crown.

There are two types of games of chance widely available in Maryland. Charities may offer bingo and raffles. Bingo rules are liberal. Raffles may only be operated twice per year. Local governments set the licensing and location rules for charitable gambling in Maryland.

A state lottery sells scratch-off and lotto tickets. These are available at convenience stores throughout the state.

There are five Maryland casinos. They are Rocky Gap Casino, Horseshoe Casino, Hollywood Casino, Maryland Live!, and Ocean Downs. MGM National Harbor will open in late 2016. These Maryland casinos offer all the same games found in New Jersey or Nevada. These popular casino games include slots, video poker, blackjack, craps, roulette, and card games banked by the house.

Maryland Gambling Laws

Maryland gambling laws are strict for activities that are not specifically legal. Possession of gambling devices is illegal for residents. This also applies to vessels that may go out into international waters. Charities must register with local authorities. Charitable games permitted are paddlewheels, wheel of fortune, raffles and bingo. Charities may hold no more than two raffles per year. Bingo players may not purchase more than 54 tickets in a session.

Maryland casinos are allowed to operate if legalized through a local referendum. Each region may only have one gambling operation. There are six jurisdictions that voted to allow casinos in Maryland. The Maryland casinos are located in:

• Allegany County
• Baltimore
• Cecil County

• Anne Arundel County
• Worcester County
• Prince George’s County

Maryland casinos may offer a wide variety of games. These casino games include slots, video poker, live poker, craps, roulette, blackjack, Three Card Poker, Four Card Poker, Ultimate Texas Hold’em, baccarat, and other card games. There is a 67 percent tax rate on slots. This is the highest in the country. The tax on table games and live poker is 20 percent.

Horseracing is legal in Maryland. Greyhound racing is not. Racetracks may offer live racing and race books. Registered interstate racing companies may accept bets over mobile apps and the Internet in Maryland.

The state lottery may sell scratch-off tickets and hold lotto drawings. It may participate in interstate lotto drawings. Tickets may not be sold over the Internet.

Maryland is one of two states, the other being Kansas, that specifically legalized fantasy sports. The state adopted the fantasy sports exemption in the Unlawful Internet Gambling Enforcement Act in 2012. There is some debate as to whether the language applies to daily fantasy sports sites like DraftKings and FanDuel. However, in 2016 this gambling law was repealed by the Maryland state legislation, making it once again illegal.

The minimum gambling age in Maryland is 18 years for lotteries, racing, and charitable gaming. Maryland casino gamblers must be 21 years or older.

List of Maryland Casinos

Beyond the hundreds of lottery retailers and bingo halls, there are just eight places to gamble in Maryland. Laurel Downs and Pimlico Race Course are the two racetracks. There are 146 days of live racing between these two venues. Each also has a race book for simulcast betting.

There are five Maryland casinos open for business in the state. A sixth is currently under construction. You can use the information below to find a location, or use our Maryland casinos map to help guide yourself to the nearest one.

History of Maryland Gambling

Horse racing dates back to the mid 18^th Century. The Maryland Jockey Club was founded in 1743. Its first races were held at Pimlico Race Course. It is still open today and home of The Preakness, one of the three Triple Crown races. Racing became specifically legal under state law in 1870. That is when pari-mutuel betting pools were created in Maryland under a state racing commission. Regulation of the specific tracks was left to the county or city where the track was located until 1912 when the state took control.

Maryland approved off-track betting in 1988. Simulcasting of races was only legal at the time when live racing was not operating on a track. In 1993, the state expanded off-track betting at any time the facility was open for business.

Voters approved a state lottery in November 1972. This was done through a constitutional referendum. The first ticket was sold on May 15, 1973. Early drawings were lottos of the Pick 3 and Pick 4 variety. The first scratch-off ticket was not sold until February 10, 1976. Scratch-off tickets are bigger sellers than lotto games today.

Casinos were approved through a statewide constitutional referendum in November 2008. Casinos operate under the oversight of the Maryland Lottery. Hollywood Casino in Perryville was the first to open on September 17, 2010. Ocean Downs opened the following year. Maryland Live! opened in 2012. Rocky Gap Casino opened in 2013. Horseshoe Casino launched in Baltimore in 2014. MGM National Harbor was awarded the state’s resort gaming license. It will open in 2016.

Maryland does not permit online gambling. It has been home to several busts related to the acceptance of internet bets. The Maryland office of the Department of Justice led busts like Operation Texas Hold’em where funds were distributed to local police departments for their participation.

The Linwood Payment Solutions sting operation originated in Maryland through the Department of Justice. This is where a bogus processor was created to handle payments for offshore online gambling sites and eWallets. This took down UseMyWallet and some sports betting sites in May 2011, just six weeks after Black Friday. This was referred to as Blue Monday in the online gambling world. Companies that survived saw their domain names seized and were forced to buy ones in other countries.

Calvin Ayre and two other officers of Bodog were indicted by the same Department of Justice office in February 2012. The Bodog.com domain was seized at the time. U.S. players had already been moved to Bovada.lv by that time as the company saw the risk of its .com domains. None of the three indicted ever traveled to the U.S. to fight the charges. Calvin Ayre was on the Top 10 List of the U.S. Immigration and Customs Enforcement. He dropped off the list even though he is still at-large.

Maryland was the first state to expressly legalize fantasy sports in 2012. The state legislature passed the exemption in the Unlawful Internet Gambling Enforcement Act. This made it clear that fantasy sports contests were legal in the state.

Maryland Casinos & Gambling FAQ

Race books are permitted at the two racetracks in Maryland.

Pimlico Race Course and Laurel Downs are the two pari-mutuel tracks in Maryland.

Off-track betting and fantasy sports are legal over the Internet and on mobile devices.

All fantasy sites accept Maryland players. The largest are DraftKings, FanDuel, CBS Sports and Yahoo! Even conservative sites like StarsDraft and Star Fantasy Leagues accept Maryland players.

The most popular off-track betting sites that accept players from Maryland are TVG, TwinSpires, and BetAmerica.

There are six casinos approved in Maryland. Five are open as of March 2016.

Maryland State Gambling Tax Penalties

Slots, video poker, live poker, blackjack, craps, roulette, Three Card Poker, Four Card Poker, Ultimate Texas Hold’em, Pai Gow Poker and baccarat are among the available games.

Maryland State Gambling Tax Forms

The minimum Maryland gambling age is 18 years for bingo, racing and lottery, and 21 years for casinos.