Don't Mess With Taxes

Last November, Louisiana voters in 55 of the state's 64 parishes approved sports betting. Gov. John Bel Edwards signed the necessary enacting bills into law in June.

And this month, the Louisiana Gaming Control Board passed emergency sports betting rules, effective Aug. 23, to start the licensing process and finalize permanent rules.

The process probably isn't streamlined enough to allow bettors to put down cash on the Thursday, Sept. 9, meeting of my frustratingly underachieving Cowboys and the current Super Bowl Champion Buccaneers, which kicks off the 2021 National Football League (NFL) season.

But the hope of sports betting supporters is to have live sports wagering in the Pelican State at some point during this football season.

Wide-ranging sports bet options: Once the licenses are awarded, bettors in the Pelican State can wager at the approved locations on all the major league games — NFL, National Basketball Association (NBA), Major League Baseball (MLB), National Hockey League (NHL), and Major League Soccer (MLS) — as well as on college football and basketball, and more, including European basketball leagues, cricket, and rugby.

In addition to accepting in-person sports bets, each of the 55 parishes that approved gambling on sporting events also can allow online bets via regulated and licensed online sportsbooks in Louisiana.

The state’s 16 casinos and four racetracks with slot machines will have the first crack at implementing sports wagering operations on their premises. If those establishments aren't interested (yeah, like that's gonna happen!), then video poker outlets will be able to apply to run sports books.

Eventually, Louisiana sports wagering also is expected to expand to bars and restaurants that serve alcohol in the 55 parishes.

But even with online betting options, a bettor will have to be physically in one of the parishes where sports betting is allowed in order to place a bet. If a person goes to a non-betting parish, wagering websites and apps won't work.

As you've probably figured out by now, this weekend's By the Numbers figure is 55.

Louisiana's tax take: And now, what you've been waiting for, the tax numbers.

Part of the reason most Louisiana voters agreed to OK sports betting is that the wagering will provide the state with more money.

Louisiana will tax the net gaming proceeds of the sports betting operators, with a 10 percent tax collected on wagering at onsite locations. If a wager is made through mobile apps and electronic devices, the tax take is 15 percent.

Sports betting operators also will be charged various application and licensing fees, ranging from $2,000 to $500,000.

The state's betting proceeds will be parceled out to state education and wellness programs, the parishes, and Louisiana's general use fund.

Federal gambling tax refresher: As for those who place successful Louisiana sports bets, those winning wagers, like all gambling income in the United States, count as taxable federal (and in most places, state) income.

For simplicity's sake, let's focus on the federal tax rules.

If your take isn't that much, the Internal Revenue Service relies on your honesty in reporting the amount.

However, under certain gambling payout situations, the gambling establishment where you won will withhold taxes, at a 24 percent rate, and report your good fortune to the IRS.

Withholding on gambling winnings is required when the pay out, minus the bet, is:

• More than $5,000 from sweepstakes, wagering pools, or lotteries, or
• At least 300 times the amount of the bet.

Even if there's no withholding, your winnings will be reported to Uncle Sam's tax collector on Form W-2G, a copy of which you and the IRS will get early in the next year so you can report it when you file your tax return.

The bet proceeds payer must provide you (and the IRS) with a W-2G if you win:

• $600 or more if the amount is at least 300 times the wager (the payer has the option to reduce the winnings by the wager);
• $1,200 or more (not reduced by wager) in winnings from bingo or slot machines;
• $1,500 or more in winnings (reduced by wager) from keno;
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament; or
• Any winnings subject to a federal income-tax withholding requirement

Note, too, that betting parlors aren't required to withhold taxes or issue a W2-G to players who win large sums at what the IRS deems games of skill rather than games of chance. The IRS says these skill games are table games, such as blackjack, craps, and roulette.

It's not clear how the IRS came to make this distinction. While I'm admittedly unskilled when it comes to betting, I'm pretty sure that chance is involved in every single gambling option.

And remember not to push your luck or take any chances when it comes to taxes. Even if you don't get a Form W-2G, you're legally required to include all your gambling winnings on your tax return.

You also might find these items of interest:

• 6 tax & financial tips for the next lottery millionaire
• Tax implications far from nil for college athletes' NIL money
• Reporting all your income, including gambling winnings, on Form 1040 Schedule 1

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