Connecticut online gambling taxes

Online gambling in Connecticut (CT) is legal for casinos and sportsbooks. The Connecticut Department of Revenue Services (DRS) oversees state gambling taxes and collects 6.99% of gambling winnings. This is just the initial deduction and not necessarily the final amount you owe.  

The Internal Revenue Service (IRS) holds back federal gambling taxes at a rate of 24% on winnings over $5,000 for all forms of gambling. For winnings or payouts higher than this amount, you’ll need to fill out a W-2G form and submit it to the IRS. 

If you don’t provide your Social Security number, the withholding rate goes up to 28%. This higher tax rate or fee is put in place to promote tax compliance.

While federal tax law allows gambling losses to be deducted, Connecticut does not permit this deduction at the state level.

CT players must declare all gambling winnings as state income. However, unlike New York and Pennsylvania, Connecticut does not impose state taxes on gambling winnings for non-residents, even if they won while playing in Connecticut.

Is the tax rate in CT different for each gambling type?

No, Connecticut applies the same 6.99% state tax rate to all gambling winnings over $5,000, regardless of the type of gambling. This includes money won from: 

• Online casinos
• Sports betting
• Sweepstakes casinos
• Poker tournaments
• Lottery winnings

How does your income affect taxes in Connecticut?

In Connecticut, gambling winnings are counted as regular income, which means they add to the total money you make in a year. The state has different income levels, and the amount of tax you owe depends on where your total earnings fit. 

Even though Connecticut taxes all gambling winnings at 6.99%, your total income could push you into a higher tax category for other earnings, like your job. This is based on the graduated income tax system, which ranges between 2% to 6.99%. However, this should not be confused with the automatic tax withholding rate which is fixed at 6.99%. 

In other words, even if Connecticut withholds 6.99% on your gambling winnings, you might actually owe less when your total income is calculated. Likewise, if you’re in the highest income bracket, 6.99% is the correct final rate, and no refund will be due. 

How does this work for Connecticut taxes?

Let’s say you’re earning $50,000 a year from your job and win $10,000 from any type of gambling. Since Connecticut counts money won as income, your total money earned for the year now sits at $60,000.

What does this mean for your taxes?

1. Your gambling winnings are taxed at 6.99%
   
   – This means you must pay $699 in CT state tax just for your gambling winnings.
2. Your total income goes up
   
   – Before winning, you were in a lower tax group for regular income.
   – Now, if your total income is over $60,000, you could owe more taxes when you file.
3. Your paycheck tax could go up
   
   – Connecticut has different tax levels for total income, so if your gambling winnings push you into a higher group, you could owe more on your job earnings.

A bigger win means bigger taxes

Let’s say you won $100,000 from gambling online, your total income would now be $150,000.

• You would still pay 6.99% of the total amount of money won
• But because your total money for the year is much higher, you might also pay more tax on your job earnings.

Here’s a table showing you how your income in CT affects gambling winnings: 

How to pay gambling taxes in Connecticut?

Here’s a guide to paying tax on money won online in CT:

1. Check if the gambling site is withholding taxes

Connecticut requires a 6.99% withholding on gambling winnings if:

• The payment applies to federal income tax withholding.
• The gambling site has a physical office or conducts business in Connecticut.
• The payout is made to a CT resident or someone receiving the payout on behalf of a CT resident.

If these conditions are met, Connecticut income tax will be held back from the money you won. If not, you are still responsible for declaring and paying the state income tax on all money received from gambling.

2. Look out for a W-2G form

• Gambling operators must give you a W-2G form for certain winnings, such as bingo, slots, keno, poker, sports betting, and other online gambling activities. 
• Once you receive a W-2G form, know that the IRS knows about your winnings, and so does the Connecticut DRS.

3. Report winnings on your tax return

• As a Connecticut player, you must declare all money won on your state tax return,  whether taxes were held back, or if you received a W-2G form. 
• Gambling winnings cannot be subtracted from Connecticut income tax, even though you may subtract it for federal income tax purposes.
• If your total income, including gambling winnings, exceeds the IRS filing threshold, you must complete and submit Form 1040. Additionally, if taxes were withheld from your gambling winnings, you should file this form to claim a refund, even if your total income is below the filing requirement.

4. Additional considerations

• Keep detailed records of all your gambling activities. This includes amounts won or lost, as well as the names and addresses of gambling operators. 
• This is necessary for accurate filing and in the event, there’s a review or audit.
• If you do not live in Connecticut, any money you won won’t be taxed, even if you won it in the state.

Tax breakdown for players in CT

All money won online via gambling is considered regular income and will be taxed under CT’s progressive tax system, which is 2% – 6.99%. The DRS will hold back 6.99% on winnings over $5,000, but your final amount owing depends on your total income earned for that year, like wages, bonuses, and other earnings. 

The 6.99% automatic tax deduction applies to all types of gambling in CT. The section below will give you example scenarios of what you can expect when winning amounts under and above $5,000. 

Online casinos

Example: Winning $5,000 from online slots adds to your taxable income and will be taxed based on your total yearly earnings.

Sports betting

Example: Winning $2,000 on a sports bet is taxed based on your total income, but since it’s below $5,000, automatic withholding does not apply.

Sweepstakes casinos

Example: Winning $1,000 from a sweepstakes is taxable, but no automatic withholding applies since it’s below the threshold.

Poker tournaments

Example: Winning $3,000 in a poker tournament adds to your total taxable income, but since it’s under $5,000, no immediate withholding is applied.

Lottery winnings

Subject to a mandatory 6.99% withholding tax if winnings go above $5,000 or are $600+ and at least 300x the bet.

Threshold for Withholding:

$5,000+ wins – Automatic 6.99% withholding applies.

$600+ and 300x the bet – Automatic 6.99% withholding applies.

Example: Winning $10,000 from the lottery means that Connecticut will automatically hold back $699 (6.99%), but your actual tax owing depends on your total income.

What happens if you don’t report gambling winnings in Connecticut?

Gambling winnings are taxable in Connecticut, so you must report them on both federal and state tax returns. If you don’t, here’s what could happen. You could owe extra money, the IRS and Connecticut charge interest on unpaid taxes. 

If you don’t report your winnings, you could face late fees or a penalty for underreporting. You could be audited and the IRS or Connecticut’s tax agency may investigate your finances to find missing income. 

That said, it’s in your best interest to keep track of all money you’ve won online and comply with both federal and CT tax requirements.

Is gambling in CT legal?

First things first, is online gambling legal in CT? If it’s the big 3 that you’re wondering about, then you’re good to go. Real money online casinos, online sportsbooks, and poker are all legal forms of Connecticut online gambling. 

There’s also the Connecticut Lottery, which has been at the forefront of CT online gambling with a website running since 2010. It’s even available for slightly younger audiences. Unfortunately, there are no dedicated poker rooms, though you can play poker at online casinos.

The CT gambling age is 21 for most things, so don’t rush to grab Connecticut plane tickets unless you’re 21. If you’ve found yourself in Connecticut and you’re between 18-21, you can try your hand at the lottery. Anyone younger is just going to have to stick to seeing the penguins at the Mystic Aquarium.

Online casinos Legal since 2021

Online casinos are a safe and legal part of CT online gambling. Legalized in October 2021, they haven’t been around for very long in CT, so unfortunately there aren’t a lot of options.

The two main casinos for CT gambling are the Mohegan Sun and DraftKings. Connecticut has allowed both of its federally recognized Native American tribes to offer casino apps, and they certainly did not waste any time doing so.

Having partnered with some of the biggest brands in the sector, these two Connecticut online casinos can provide safe sites, with tons of games and fast load times. FanDuel has also partnered up with Mohegan Sun to offer even more online casino games and slots, making them a power couple in Connecticut.

• Huge game options
• Generous welcome bonuses
• Great brand reputation

• Very few legal online casinos

Connecticut sweepstakes

If you’re looking for some variety in your Connecticut online gambling, you can always try your luck with some sweeps casinos. These gambling apps offer a welcome alternative while waiting for more real-money spots to open in the state.

The main draw to these sweepstakes casinos is that you get to play for free. Just load up your favorites and have some fun. One of the US’s biggest gambling brands, BetRivers, runs a social version called BetRivers.net, which you can try out absolutely free, or you can try Gambino Slots for something built to be social-first.

• Free to play
• Great for demo games

•  Very few options

Online sports betting Legal since 2021

Connecticut legalized online sports betting slightly before online casinos, with legislation passing in May 2021. This unfortunately did not translate to a larger selection, as the options for sportsbooks in Connecticut are a bit sparse. 

The main sportsbook providers in Connecticut are FanDuel sportsbook and SugarHouse sportsbook. FanDuel of course needs no introduction, being one of the most trusted brands out there, not to mention a partnership with Mohegan Sun has helped FanDuel quite a bit in Connecticut. The other option is SugarHouse, the official partner for the Connecticut Lottery. 

Finally, there’s DraftKings, operated by the Mashantucket Pequot tribe. Quickly becoming one of the largest sports brands in the US, it offers plenty of sports and a fast and safe website.

• Good sport selection
•  Safe and trusted brands
• Solid welcome bonuses

• Once again, few options

Online poker Legal since 2021

Poker is one of the most popular forms of online gambling and warrants its special mention. Legalized in 2021 , Connecticut is now one of the few US states that allow online poker. 

The catch is that poker can’t be found on dedicated platforms, and can only be hosted at online casinos.

This unfortunately means there are no dedicated CT poker platforms that we can show off here. However, all the casinos listed above feature poker in their catalog, so poker fans can rest easy.

• Live options available
• Safe and trusted sites

• No dedicated poker platforms

Other forms of gambling in CT

If you’re not interested in the big 3 of casinos, sportsbooks, and poker, Connecticut has a few other options. 

Non-profit organizations can run games of chance like bingo for fundraising activities and have been doing so since 1939. Nowadays more games can be played like raffles and bazaars, and it’s still a very popular form of gambling in CT.

There are also options like keno and fantasy sports, which are listed in the cards below. 18-year-olds can hop onto keno and fantasy sports straight away, so they’re great if you’re between 18-21.

Connecticut state lottery

The Connecticut State Lottery is one of the oldest state lotteries in the USA, having been around since 1971. This half-a-century-old lottery has been a great help for the CT General Fund, having hit the $10 billion threshold for profits returned to the general fund in 2019.

The CT Lottery mainly offers the major national draw games, which are the Powerball and Mega Millions. However, you’ve also got your state-level draw games, such as the simple Pick 3, 4, and 5.

Other alternatives such as keno are also done through the CT Lottery. In October 2021, the CT Lottery officially announced its partnership with SugarHouse, showing that this old lottery isn’t falling behind its younger contemporaries.

Connecticut gambling — offline 

Connecticut doesn’t have much to offer when it comes to retail land-based gambling. Thanks to close relations with the Mashantucket Pequot Tribe and the Mohegan Tribe, only their 2 land-based sites are available, the Foxwoods Casino Resort and the Mohegan Sun Casino.

The CT Lottery on the other hand does have 15 outlets across the state for sports betting, though these are of course far less fancy and unlikely to have a golf course anytime soon. Still, if you’re looking for simple sports betting without all the bright fancy lights, you can always check out the CT Lottery sites.

Connecticut gambling regulators

Just because gambling is legal in Connecticut, it doesn’t mean you should rush headlong into every gambling site you see. It’s always good to stay safe, and part of staying safe is knowing a bit about the actual gambling regulators of Connecticut.

The supreme licenser in Connecticut, and the ones who handle all regulations, are the Connecticut Department of Consumer Protection (DCP). They have the first and final say on who gets to legally operate within the New England state. 

Their main job is to make sure the operations are playing fair and you’re not having your money or information stolen from you. They also test the security of the online casino sites, to make sure that your average tech junkie can’t just hack in and steal your social security number. Once everything passes their tests, they then issue the license for the site.  

Top auditors in the state

FAQs