Bitcoin Forum

If you are gambling at a Bitcoin Sportsbook, and want to keep it honest and report it, it can be very difficult to track not only your wins and losses, but also your Bitcoin transactions and capital gains and losses.

The way I understand it, if you buy and then sell or spend Bitcoin, it is considered a taxable event and is to be treated like you bought and sold a stock. You have to keep track of your buy price and your sell price and report it like a stock trade.

Does this mean that when you win a wager, you have "bought" some Bitcoin at the current price?
And if you lose a wager, it is as if you "sold" some Bitcoin at the current price?

If so, it could be very difficult and confusing to track all of your buys and sells, as you have to decide which Bitcoin you "sold" when you lost a wager. It gets crazy when it is fractions of Bitcoins that you have to figure out that you lost or "sold" at a certain price and then decide what price did you win or "buy" them at.

For example, you may have lost or "sold" .25 BTC when BTC was at $1,000, but you then have to choose which BTC and what "buy" price you have lost, or "sold." It may be .10 BTC that you have left from a win or "buy" when BTC was at $900, .05 BTC that you have left from a win or "buy" when BTC was at $800, and .10 BTC that you have left from a win or "buy" when BTC was at $700.

You have to keep track of all your different BTC wins or "buys" and at what BTC price, and then choose which ones to "sell" off when you lose a wager.

If you do a lot of wagering, this could get crazy.

Is this right?

At this point of time, I guess it is better to revisit the law if there's any that has already been circulated. I am not from US and in our country bitcoin transaction is not taxable yet. From what I understand, if gambling activities is already taxable.

I guess it is the duty of the gambling site to register their business and withhold tax from their clients on the winning bet.

The withholding agent (gambling house) then will do their responsibility to remit the tax collected and you are free from any tax liabilities. Just my opinion but as I say, you have to review the details of the law.

That's not going to happen in the U.S. as the gambling sites are not registered and do not comply or withhold tax. Thta's up to us to keep track of our wins and losses and declare our income.

My concern is more with the tacking of Bitcoin buys and sells when you win and lose at a Bitcoin Sportsbook. Technically, it sounds like I would have to report a Bitcoin "trade" every time I placed a bet in addition to tracking the gambling wins and losses!

Anyone have any experience with this?

Most probably just don't claim their gambling activity on their taxes and in reality not many have much in the way of winnings to report.

As far as I know, in the US you don't have to get anything taxed if you are not making at least above minimum wage.

I wouldn't bother to even check how it works unless I was making above minimum wage.

Just keep making gains and when you make above minimum wage just the gov webpage or just keep storing it in bitcoin and don't cash out, put them in cold storage for 10 years and you will be rich.

I agree, this is the case for most online gambling sites. They will most likely not declare they are even operating and for sure they are not paying taxes as they don't even declare it. If the IRS does not know they are operating then no one will be taxed, unless there would be thorough investigation on the people that operate it will be conducted.

Bitcoin gambling is tax free as one can register anonymously in any bitcoin site and transfer their earning to their wallets and government cannot trace it.
But then if there is a rule, it must be follow. Rules are made for our benefit and also honesty is something which comes from inside. People should be honest even if they have a chance to fool the government and not declare their bitcoin gambling income.

I dont think anyone is that much honest to support the government and not himself. Does Government give some amount if you lose in gambling ? No, Never.  Then why they need our money when we win ?

By the way, Do you have a link stating this current rule for U.S ?

"Honesty is the best policy" is an old saying.

In most cases you can subtract your losses from your winnings for tax purposes.

Here are 2 good articles on taxes on Bitcoin:

https://bitcoin.tax/blog/filing-your-bitcoin-taxes/

https://www.thebalance.com/how-bitcoins-are-taxed-3192871

Of course that is the process of declaring tax. You do subtract the losses, expenses and other things to the winnings/income then declare what is left. The problem I see is that they are not really registering their gambling site to the IRS and hence they do not get checked. This is why we don't see any disclosure regarding this in any gambling site.

But now, if you are gambling in Bitcoin, in addition to reporting your net income from gambling, after EVERY wager, you also have to record it as Bitcoin "Buy" if you win or a Bitcoin "Sell" if you lose and figure out the capital gain of loss that resulted. After EVERY wager?!

Most if not all bitcoin casinos are prohibited to offer their services to any residence in the united states.
If you have an ip address from that country they tell you this when you access the sites. :-\
Even CB if you check.

I have yet to find a Bitcoin Sportsbook or Casino that blocks U.S. residents. Maybe if they are registered in Europe, but not Offshore ones.

I dont know this thing kind of thing which most of us residents or people are really being restricted on these things i could say that they have really a strict implementation which impose laws regarding on taxation and other stuffs.Sad to hear on this one hope this wont happen on my country.

Thanks for the articles they are good reads. I was wondering about taxes myself. As OP was saying it could get very confusing.

Dude, who in his right mind would be honest enough to declare anonimous gambling winnings to government? xD

Anyway, if you want to be THAT honest, if I remember well you don't have specific taxes for online gambling.
Furthermore, you should also know that you have to notice every currency change you're making... I think there is a tax applying here. Something you should pay everytime you sell your btc for dollars...

i don't know about the US taxes on bitcoin gambling, but as the sites is on internet and we are playing gambling in internet, i think the US government is not applying taxes for bitcoin gambling. i am not sure about this because i don't live in the US, but if we doing buy and sell in coinbase, i think the taxes will be applying when we want to make depost or withdraw the money. better to ask the third party service that help us to do buy and sell bitcoin so we can understand about the taxes.

As long as you are gambling from US country and gambling site is based on it. It requires a tax because this involves money. It is stated on their laws. Not sure about the specific law. That's why online gambling is illegal because they are evading tax and they operate without the permission of government.

I don;t think online gambling is illegal, there are quite a lot of online gambling sites within the USA. The US are really open to gambling compared to every other country out there. So, I guess online gambling is really legal there. The problem is really just about taxing them, I don't think gamblers have to pay any tax in playing. That would be absurd.

In the U.S., ALL income is taxable - even from Offshore Gambling sites.

I agree, there are loads of sites which are licensed in the US and they are all taxable if you come out with profit. Even if the site is from another country, as long as you are earning a substantial amount, it will be taxable income. There is no tax involved if you don't win anything or just plainly lose your funds.

Yes not only just online gambling sites in the USA we see a number of real casinos around the country. I don't know how they will deduct tax. Is it possible in Bitcoin gambling? If they are collecting tax from players, then gambling should be legal in the USA. I do not belong to the USA but I never seen any news regarding this topic.

Offshore Gambling sites will not deduct U.S. tax. It is up to the U.S. citizen to declare their income from gambling.

From my understanding of the current law, it is not illegal for a U.S. citizen to place a wager at an offshore Sportsbook, but it is illegal for the Offshore Sportsbook to take that wager, and to accept deposits! There are also State laws that may make it illegal for the State citizen to place a wager, so you should check your State laws also.

The U.S. is not looking to jail citizens for gambling, but the IRS wants you to pay your taxes on your winnings. Fair enough. Eventually, it will be legalized, regulated and taxed.

That's not going to be happen, because Bitcoin is anonymous, And as far as I know all gambling site in bitcoin industry is taxed free, if ever happen that there is tax the essence of bitcoin will also be change from decentralization will turn to centralization and that is insane. Decentralization is the good point of Bitcoin that's each government in all countries cannot control it. That's why it's hard for them to trace it.

If that happen in the US, for sure it would be unfair for the gamblers out there that they're winning bitcoin price will automatically deducted by tax, and that's new to me also if that's will be implemented.

If the gambling site is not regulated then there would be no problem for us to worry about how we are going to remit the right taxes. Law in US is very complicated and strict due to the fact that there are good volume of users in that country, but as for me, I'm happy with the current situation in our country now as I do not need to declare anything about bitcoin.

However, if the right time will come that it's required then I will just simply comply with it maybe if I cannot hide it. lol.

I'm not sure if it works the same way with bitcoin as it does usd or not. But with usd you're not required to report it unless you win $750 or more off of one single bet. At least that's how it works in my state.

i personally have o idea about that either the online gambling sits are free of taxes or not and it is because as in our country gambling is not as legal and therefor here no one can openly run a casino either he is running physical or online gambling sites. May be in some countries it is legal and there may be tax on it.

Tax for what? yeah sure go ahead and obey them blindly those laws to take your money and spend on weapons and military arsenal with only one goal to kill other people instead of spending them on making sure there is peace in the world.
But honestly what are they doing when it comes to online gambling or cryptocurrencies? are they protecting you from cyber attacks/hacks/theft/fraud?
This kind of tyranny shouldn't be tolerated by any citizens of any country, as you know governments around the world are the minority ruling us the majority and ironically in bitcoin network the majority(miners doing everything in consensus) are ruling the minority.
Bitcoin can not be geographically allocated so it's more like the international waters, if you hide your transactions and business in general using a mixer big and trusted enough such as BitMixer.io no one and I mean NO ONE will be able to link you as a US citizen to any transaction and financial activity what so ever.

are gamble site even tracked in the usa? how they can track them and the user who win? those gamble site have no registration of any type and you can win and go away at any point without any trace, minus your address but this is not connected to your real name, i think with bitcoin there are no tax to pay with gambling, with usd in fact they often require id and stuff like that, to avoid this issue

Not to mention that US governments are not okay with people gambling in any way, shape, or form that pertains to "luck" or "chance" on casino like games (except in areas like Las Vegas with special "permissions"), but is OK to buy state lotto tickets.  God knows how that money, which is collected to fund in state education, is used.  The funny thing with cash (which is the only way to purchase lotto tickets) is that it is a truly anonymous/fungible physical form of currency; which allows the government to be able to spend it on whatever they chose and to be responsible for whatever they deem fit.

To your point about mixers though, I'm not so sure about that.  A mixer that is "big" and "trusted" is a centralized source where governments can attack.  There are many ways people with resources, like the government, can be able to manipulate the host of the site to comply and cooperate, etc.

If Bitcoin has taught us anything, it is the power of decentralization.  Things always tend to want to centralize... you can even see that today with the centralization of mining, exchange sites, etc. in order to be viewed as "credible", which is just wrong.  I find it important to keep trying to find a system that promotes a truly decentralized way of being able to exchange a currency online without having to worry about having to go to a centralized mixing system in order to remain "anonymous" or have your currency to remain fungible and not associated with past transactions.

maybe the government can only track by the domain name and if its related with gambling, bitcoin, games, games online, then they will watching people and maybe they will write some note for the domain and people which is visited that domain name. but i think its difficult to know every people which playing gambling using bitcoin as people is not use their name for playing gambling and only use bitcoin wallet address to make a bets.

I'm not any tax pro, but I analyzed lost of crypto topics, and I would apply common sense.

Only sales and exchanges are taxable events. This means when you bet you don't sell or exchange you just put your property to wager.
Let use Doge as an example. You withdraw 1000 doge from an exchange (It's your property) to the gambling site. You make a few bets and you balance is 1050 DOGE, you withdraw from gambling site back to exchange or your wallet doesn't matter. You acquired 50, the 1000 you withdraw and deposit back is still considered holding, and 50 is considered win from gambling flat 25% tax from this 50 (converted to USD)   

From the IRS: "You are required to report the fair market value of your non-cash winnings as "other income" on your Form 1040."

Keep in mind 2 things

1. sending around your property is not tax event, it's like getting your TV to your bother and bringing back after a week.
2. "coins" don't have IDs for tax purpose, you can't say Oh you took 1000 doge to gambling site then brought back different 1000 Doge back, think of like you took 2 TVs model number Doge, bet 1 TV, for which you got another TV, now you have 3 TVs, 2 where yours anyway and 1 you won, so you pay tax on one TV you won, the 2 remaining where never sold or exchanged.

If crypto community will keep up with this obsession of "taxable" soon some newbies will pay tax for generating a new address, please STOP.

For the loses in gambling, if you deposited 1000 and lost 50, you still own/hold 950, and you claim 50 loss the fair market value. As a proof you need your gambling history to prove one way or another.

Whatever you hold in your gambling account is what you "hold and in possession" unless you permanently loss the access to your account then it's a loss of a property. The only taxable event in my opinion here would be converting Doge to BTC at the gambling site as some allow such.

I believe it works alot like slot machines, you do not have to claim taxes unless you hit over 500 or 1000, and or if you hit  jackpot, I know at a casino I hit a 700$ progressive it was not taxed, because it was a progressive but my brother hit a 500$ jackpot, and had to file, So I'm not 100% sure how it works, I would ask you acctountant! I'm also pretty sure there is a certain amount of money you can make befor you claim, something like less the 8k usd or something!!!!

My uncle always uses bitcoin to bet into any kind of gambling as for his says if your bet is max into their minimum wage of course it will taxed you depends on their policies and agreement, and you need to agreed with that for you to make a good bet ahead

Taxes on gambling is not good, good thing I am not from the USA.
I am not certain with the laws in my country but so far I am able to freely gamble online anytime.
I believe it's really hard to regulate crypto and as a gambler, crypto gives us full freedom.

Although US has gone forward with different bitcoin laws I think that when you deposit to a betting site is as if you sold bitcoin at current price and when you withdraw from the betting site is as if you bought bitcoin at current price.

I also think that this is a wrong law and only the betting company should pay taxes and not the end user.

Really? I mean I thought that it was practically impossible to gamble online legally in most states.
Here's a map that shows where it's legal to gamble: https://www.playusa.com/us/

That said, it's not because it's not regulated that the IRS can't tax you. I'd either invest a lot into playing anonymous or report any winnings.

In the US as a citizen even if you leave the country and dont work there, dont receive any income from USA, have no assets there and live for years abroad in another country;  even after all that you will still owe the US Federal government taxes on your income.

This is one of only two countries and the other is a tiny regime that has such a law for foreign citizens.    You literally cannot escape these taxes, exiting as a citizen will also cost many thousands in fees as well as the taxes.    The one alternative I have heard of is to become a registered member of the Federal Territory of Puerto Rico which as it is not an incorporated state does somehow allow them to field no tax liability on you.  You will pay local taxes only.   You must be present in the country for at least half the year and tax is only affected going forward not previous gains

The problem with US is they want to tax everything, so in order for them to do that, they will find ways to control and one is they will require us to adopt with the rules and regulation and if we fail to adopt then we will face the legal consequences.

Unclear standard law in crypto is the reason why the price is dumping now, people has loss confidence because SEC has not make a move to release a law that would help crypto investors or users, instead, they crack down ICOs, illegal gambling sites using the AML law.

750$ is a quite good amount and that too with a single bet as you mentioned so ideally you should be playing with that much amount itself that it is under 750$ winning amount even if you won the bet so that you are not required to pay the taxes. I think btc needs to be the same as US else it would be quite harsh for people who bets with btc.

The question is two parts, do we talk about the casinos in USA or the people who are from USA and gamble on a foreign casino website. Now, I doubt there are places in USA that allows you to open a bitcoin casino, I think it is illegal for people to have online casinos there, last I remember there was a ton of trouble going around about poker websites years ago and most of them got shut down and had to relocate to some offshore country like caracao or something. Hence ever since those times no online casino would prefer USA anyway.

Moreover, if you are from USA and want to gamble that means your taxes depending on your honesty, since USA can't really check your gambling like they do with trading, they will have to rely on your honesty. Exchanges give your information to government so you HAVE TO pay your taxes there but casinos don't give a damn about government so you can not pay a single dime if you don't want to.

I don't know how the gambling site works in converting BTC to FIAT through win or lose,my assuming gambling sites usually already have BTC and win or lose already in BTC units.If changing to FIAT is related to trade but if I read your title about US tax,it seems that it was correct right I have time to read some sites related about it.

If we win on gambling sites and keeping them as bitcoin will make us no worry to pay taxes since it is not traceable but when we are trading them or converting them through exchanges you will get recorded by exchange's contract address so you will get caught if you are cheating to pay the taxes to governments.

Still, there is not any difference in taxation. You are getting taxed when you exchange your crypto to FIAT. In my country, I think that if for example deposit 100$ and you are to withdraw 200$, this 100$ difference is taxed as investment earnings. You don't have to prove that you gambled this money and you got more. You are been taxed for the amount and not for the usage of it if you see my point.

Yes thats it,we need to pay the taxes as investment based earnings when we convert them but if we keep those $100 profits as crypto then we no need to pay any taxes right.

that's truly correct need to review about the law collecting taxes  from the gambling business and most specially how to collect taxes from the player using bitcoin in online gambling because the player is anonymous identity.

My understanding of taxes is. if we use existing state facilities in some country and making it our business operate then it should addding rules for users and owners to pay taxes to the state. but if pure online is done and does not use facilities in the area, taxes should not be implemented. CMIIW

Taxes go by the location of the client perhaps not by the location of the server hosting hardware.    Gambling is not taxable by people who win in my country but some places it counts as income still,  that part is going to vary.    How they tax a foreign company that has no operation inside the country is not just about gambling, it probably applies to all sorts of questions like google and facebook even

I think China for example wants companies to form a local operation that is partly owned by government because thats how they want everything is my guess

No its does not work that way  .   tax can be implemented even if you didnt work on a comercial establishments and  i did hear that there will now be tax for online workers or free lancers and that will be planning to approved soon on our country  .

Bitcoin and cryptos should not be taxed because they are not under the regulation of banks and governments . so anything related to it should be excluded in the tax law  .

Now OP, Whether on a weekend in Vegas or watching a football game with our buddies, most of us have won or lost a little money gambling.  But did you know that you must report gambling wins and losses to the Internal Revenue Service? With cryptocurrency-based gambling quickly increasing in popularity, Bitcoin users must be aware of the tax liability imposed on their winnings.
Just like the mafia of old Vegas, the IRS wants its cut after the fun and games are over. Anyone who wins money gambling or wagering must pay taxes. This includes not only typical card games, sports books, and casinos, but also racetrack bets, gameshow winnings, lotteries, and even Bingo.

Gamblers should be aware of the tax rules that apply to gambling income. Regardless if winnings are paid out in prizes, traditional cash, or cryptocurrency, winning bets create taxable income. I. Casinos and gaming sites may withhold these taxes for you. In these cases, they provide gamblers with a Form W-2G, which they use to report how much they won and how much tax was withheld. However, even if you don’t get a Form W-2G, you are responsible for reporting all gambling winnings to the IRS.In order to be sure of which tax rules affect your gambling income, be sure to consult with a qualified tax professional.

It’s critical to keep your records in proper order in case the IRS audits your tax return. The government expects all of us to keep detailed financial records, including gambling wins and losses. So, anyone who gambles using cryptocurrency or traditional money should keep all related receipts, tickets, payment slips, statements, and key tax forms like Form W-2G and Form 5754.
If you plan to deduct gambling losses, you must be able to prove your winnings and your losses. The IRS suggests that you do so using a gambling log or diary, but often online gaming sites like example here Betchain, 7bitcasino , Fortune jack and even my favorite VegasCasino.io provide a detailed history of your activity that can be used for this purpose.

Online gambling using Bitcoin and other cryptocurrencies has increased in popularity over the past few years. In fact, online gaming was one of the first mainstream uses of virtual currencies. As a result, many cryptocurrency users may have tax liability on their gambling winnings and not even know it. If you gamble, you must report your wins and losses on your tax return or else IRS will be knocking on your door very soon .

I understand you think IRS is that much following through power like they used to (I mean after all there is a cliche that al capone went to jail for tax evasion from all things he did) but IRS doesn't posses the power they used to have. To give a better explanation, if you make millions of dollars from Vegas yes you will get caught so you should pay your taxes right away.

Moreover, you gave example of bingo, now in Florida elderly people play bingo all the time and they make money or earn rewards all the time, do you really think an old lady that won a hat from bingo gives IRS the info that she won a hat ? No she obviously doesn't. Same applies with crypto, maybe for something bigger than hat, but in the end if you make millions gambling on crypto you should report it but if you made 700 dollars for example, no one cares, not even IRS.

This is a good point.  I guess people should be aware of this. I wonder if thesame thing applies to most countries.  I have seen some posts accusing people who are getting paid in bitcoin/crypto of not paying taxes and stuff like that.

The law should be the same for all. If someone making money in USD is expected and bound to pay tax on his money, why not the once who makes the same amount of money in Bitcoin ? After all, it is just a different form of money which should not make a difference between the two.

I can see the US has been imposing some strict regulations on the use of cryptocurrency to make sure their economy stays stronger. This may include crypto based gambling too so that both gambling house and gamblers are prompt to taxes.

I don't thing you need to get taxed when you lose at wagerring. Taxes are usually paid from your net profit, that means if you lose, you won't be asked to pay tax. There is also minimum revenue to be taxed. Also, loan or your liability is the one that can help you to pay tax less. I don't know if there are any difference law on each country but at least this is how tax works in my country.

I agree that goverment collects tax from crypto profit but only IF crypto business is fully regulated and accepted to be operating, and there is no more restrictions for building bussiness in crypto space.

I pray they ban it. Gambling should be banned by governments in order to keep their people safe and sound from harm. I do believe that all the senators and government officials do know what is wrong with gambling and even if it is played with crypto that becomes double crime. So legislation should be made and implemented with extreme punishments for their citizens’ safety.