Arizona gambling taxes

Arizona’s gambling tax structure reflects the regulated market where activities like tribal casinos, sports betting, and horse racing are all legal and monitored for fairness.

At the federal level, gambling winnings are taxed at a flat rate of 24%. In Arizona, state income tax on these winnings ranges from 2.59% to 4.50%, depending on your overall income. However, lottery has its own unique rules.

While federal taxes are often withheld automatically for large winnings, Arizona does not typically withhold state taxes. For significant wins, you’ll likely receive a W-2G form, which is issued to report gambling income to the IRS as required by law.

You’ll get this form from the organization where you won your prize, whether it’s a casino, sportsbook, or lottery operator, and a copy is also sent directly to the IRS.

Is the tax rate different for each type of gambling?

Here’s a handy table outlining Arizona’s gambling tax rates and W-2G thresholds:

How to pay taxes on gambling winnings in AZ

Gambling winnings are fully taxable. If your prize is non-cash, like a car or vacation, you’ll still need to report the fair market value.

Here are the steps to make sure your Arizona gambling taxes are sorted:

1. Provide your information to the payer — Casinos and sportsbooks will typically request your ID and Social Security Number (SSN) before paying out large winnings. Online platforms usually collect this info during registration. This ensures they can issue tax documents like a W-2G and withhold federal taxes as necessary.
2. Understand who pays the IRS — For winnings over $5,000, the payer is usually responsible for withholding the federal tax of 24%. You’ll still need to account for Arizona state tax on your winnings, so keep thorough records of all gambling activities, including wins and losses.
3. Receive your W-2G form — If you hit the threshold for a W-2G, the payer will provide this form, which is also shared with the IRS. If you expect one but don’t receive it, contact the payer immediately.
4. File Form 1040 — Use Form 1040 to report your gambling income under “Other Income.” Supporting documents like receipts and W-2Gs are essential, especially if you’re claiming deductions. Those over 65 can use Form 1040-SR, and non-residents should file using Form 1040-NR.
5. Complete AZ-specific tax forms — State tax on gambling winnings is reported on AZ Form 140 (residents) or AZ Form 140NR (non-residents). Whether your winnings come from online or retail gambling, the state tax rate is the same.
6. Consider itemizing deductions — Gambling losses can be deducted up to the amount of your winnings, but this requires itemizing your deductions. While the standard deduction is simpler, itemizing could reduce your tax liability if you’ve documented significant losses.

Federal tax form W-2G

What does a W-2G form do?

A W-2G provides an official record of your gambling winnings and any taxes withheld, helping you file accurate tax returns.

Where can I get a W-2G?

If your winnings meet the thresholds outlined above, the payer (casino, sportsbook, etc.) will send you a W-2G form. The IRS also receives a copy.

What if I don’t get a W-2G?

Even if you don’t qualify for a W-2G, you’re still responsible for reporting all gambling income. Keep detailed records of your gambling activity, including receipts, to ensure compliance.

What happens if I don’t report winnings?

Failing to report gambling income can lead to penalties, interest charges, and other legal repercussions. If the IRS has a W-2G for your winnings and you fail to include it on your return, the consequences can escalate quickly.

Arizona state gambling laws

Each US state has the freedom to regulate online gambling in any way it pleases.

Sports betting in Arizona has been legal since April 2021. But if you are in search of the best online gambling sites in Arizona, we have mixed news for you. Real-money casino games are illegal.

What if you wish to access online gambling sites in Arizona? Sweeps cash casinos and social casinos offer a solution. These platforms do not allow you to play for real money, but they do feature tons of quality casino games, all of which are entertaining.

In terms of the legal Arizona gambling age, if you wish to bet on sports, you have to be at least 21 years old. Online gambling is illegal, hence, there’s no legal age. The legal age for retail gambling is 21.

Online sports betting — legal in Arizona since 2021

The only legal online gambling form in Arizona is sports betting. Up until recently, the only way that residents in this country could place bets was via retail sportsbooks.

However, all of that changed once online sports betting became legal in April 2021, and operators submitted applications to the Arizona Department of Gaming within three months. On September 9, 2021, Arizona online betting went live with seven operators offering their services to the residents.

According to state law, the Arizona Department of Gaming (ADG) is able to issue 20 mobile licenses. Ten of those licenses go to tribal operators, and 10 go to professional sports entities.

• Ak-Chin Indian Community (Fubo Gaming)
• Fort McDowell Yavapai Nation (Betfred)
• Hualapai Tribe (Golden Nugget)
• Quechan Tribe (Unibet)
• Fort Mojave Indian Tribe (SuperBook)
• Tohono O’odham Nation (Desert Diamond Digital)
• San Carlos Apache Tribe (WynnBET))
• Tonto Apache Tribe (TwinSpires)
• Navajo Nation (Hard Rock Sportsbook)
• San Juan Southern Paiute Tribe (Betway)

Social casinos — the best alternative to online casinos in AZ

You can’t access online gambling sites to play for real money in Arizona. However, if Arizona casinos with games like slots, poker, baccarat, and roulette games are your niche, there is a way to enjoy these games in the most legal way.

Residents in the Canyon State can play at social casinos without falling foul of the law. This form of legal online gambling in Arizona differs from playing at real money casinos for sure, but the fun is the same.

As the term itself suggests, social Arizona gambling sites do not allow you to play for real money. You don’t need to put down a cash wager to play games, however some sweeps cash casinos will return real prizes upon winning.

There are tons of reputable social casinos that operate in Arizona, but after a thorough check, our experts were able to find the best ones, which are listed below.

• Large game variety
• Highly reputable sites available

• No real money games

Arizona offline gambling

Online gambling in Arizona may be forbidden, but that doesn’t mean that retail casinos are not permitted. On the contrary, brick-and-mortar casinos are operating in this state, and they are extremely popular with residents of legal age.

Statistics showed that Arizona was also very profitable in the gambling industry. In 2021, the state’s annual revenue was $129 million. Out of the total sum, tribal gaming contributions were responsible for $113.6 million, $21 million of which were made in the final quarter of 2021 (Q4).

An even more impressive fact is that there are over 20 licensed casinos in the state, all of which offer various slots, table games, card games, and more. According to Arizona laws, if you wish to enter a casino facility and wager on any of the aforementioned games, you need to be at least 21 years old.

Retail gambling facilities in Arizona are regulated by the Arizona Department of Gaming, which is the authority that is in charge of regulating sports betting, DFS, and horse racing betting.

One thing that is worth noting about retail gambling in Arizona is the fact that there aren’t any commercial casinos in this state. All casinos here are owned by Native American tribes or tribal conglomerates within the casino industry. Some of the casinos that operate in Arizona are displayed in the table below.

Arizona gambling and safety

Online gambling in Arizona is prohibited as far as real-money casinos are concerned. So, there’s no respective authority that regulates online casinos.

However, retail casinos, retail and online sports betting, DFS betting, lottery, and bingo are legal forms of wagering in this state and are regulated by the Arizona Department of Gaming or just ADG.

The authority was established in 1995 by the Arizona State Legislature. This legislature consolidated the Department of Racing under the Department of Gaming in 2005. Interestingly enough, even though it is a state government agency, ADG does not receive tax revenue or general government funds. 

Latest updates — sports betting industry in Arizona

The gambling industry in Arizona is experiencing massive expansion. Even though there are no concrete signs as to when online gambling will be legalized, there have been a few events that proved that legalizing sports betting in the state was the right move.

We’ve added some of the latest updates in the Arizona gambling industry below, so let’s have a look.

• August 2024 — The Arizona Department of Gaming granted wagering licenses to Plannatech and Sporttrade, representing the San Carlos Apache Tribe and Quechan Indian Tribe.
• September 2024 — Arizona’s total sports betting handle surpassed $11 billion since legalization, showcasing continuous growth.
• December 2024 — eCOGRA received approval to operate in Arizona, enhancing compliance standards in the iGaming industry.
• July 2022 — After being postponed for two years in a row, the Arizona State Poker Championship returns to Arizona
• April 2022 — Hard Rock International launches a sportsbook app in Arizona via a Navajo Gaming deal.
• March 2022 — Sports betting in the state continues expanding, and in March, the total handle reached $691 million.
• January 2022 — Arizona reaches $1 billion in sports handle in just 3 months, becoming the first US state to achieve this milestone.

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