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March Madness begins! Place your bets and pay your taxes on winnings

March madness basketball court

March Madness, the name of the annual NCAA men's basketball tournament, begins today. The betting on the games began Sunday, as soon as the 68 teams filling the brackets were announced.

I'm not a big college sports fan, basketball included, so all I know about this year's tourney is that my alma mater is attending the Big Dance. Texas Tech's impressive roundball team, with its AP Big 12 Coach of the Year Mark Adams, will play its first game scheduled for Friday, March 18, afternoon.

I'm rooting for the Tech team. However, I am not betting on the guys. No offense meant. I'm not betting on any tournament game. Plenty of other folks, however, are.

More than 17 percent of American adults, or 45 million people, plan to be on March Madness games, according to new research from the American Gaming Association (AGA).

The AGA data also show that these bettors plan to wager $3.1 billion on the tournament.

Changing ways to bet: How will they place their bets? AGA says an even greater share of those wagering, 76 percent or almost 21 million American adults, will do so through non-bracket channels. This is putting their money down at a retail sportsbook, online, with a bookie, or casually with friends or office mates.

Outside bracket betting this year is up substantially from last year's tournament, which saw such bets made in 55 percent of the wagering.

The increase is no surprise. Since last year's tournament, notes the AGA, 29 million more Americans can legally wager in their home state compared to March Madness 2021.

Since last year's basketball champion was crowned, nine more states — Arizona, Connecticut, Louisiana, Maryland, North Dakota, South Dakota, Washington, Wisconsin, and Wyoming — took advantage of the 2018 U.S. Supreme Court decision allowing them to legalize college and professional sports betting.

That's brings to 30 the states (plus Washington, D.C.) that now offer live, legal sports betting. Three more are awaiting launch, with another 11 states with active or pre-filed legislation to legalize sports betting. 

National legal betting landscape as of March 7 2022 AGA map
Screen shot of AGA interactive map

"Americans continue to make it clear: they want to wager with the protections of the legal, regulated market. There’s no doubt this year will generate the highest legal handle in March Madness history," said AGA President and CEO Bill Miller.

Don't forget the taxes: With more money being bet through legal channels, the Internal Revenue Service also will be a winner.

As everyone knows by now, gambling winnings are taxable income. When your lucrative luck comes through a sportsbook or other state-approved regulated outlet, then your winnings information most likely will be shared with the IRS via third-party tax reporting.

That means you definitely must note the amount on your tax return. If you need a refresher, either this filing season for bets that paid off in 2021 or for next filing season for your 2022 winning wagers, you can check out the process in my post Reporting all your income, including gambling winnings, on Form 1040 Schedule 1.

Enjoy the tournament. And good luck … unless your team plays Tech's Red Raiders!

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