Delaware online gambling taxes

Online gambling in Delaware is regulated. This includes all forms of online gambling including casinos, sports betting platforms, and sweepstakes casinos. Winnings are taxed on the federal level, but if you’re gambling in Delaware, you must adhere to state tax regulations too.

Gambling winnings are taxed at 24% on the federal level, and the state requires all gambling winnings to be declared as state income taxes. Online gambling tax rates in Delaware vary between 2.2% to 6.6%. 

Unlike states like New Jersey, Delaware does not automatically withhold taxes. Therefore, online gamblers are encouraged to check their winnings and do their due diligence to remain compliant.

If you’ve received significant winnings, you’ll get a federal tax form called a W-2G. This form is used to declare all winnings to the Internal Revenue Service (IRS). The government form is usually provided by the online casino or other gambling operator, with a copy sent to the IRS as well.

Is the tax rate different for each type of gambling?

Here’s a table breaking down the tax rates for different types of gambling in Delaware:

How does your income affect taxes in Delaware?

Delaware state has a tiered tax rate, ranging between 2.2% to 5.5% if you earn under $60,000. If you earn more than $60,000, then the tax rate is fixed at 6.6%. Delaware won’t withhold more than 6.6% of all reported winnings and earnings for this reason.

Here’s a table to help you understand the state’s layered income tax rates based on different income brackets.

How to pay gambling taxes in Delaware?

Gambling winnings are fully taxable, whether it’s from online casinos, sports betting platforms, or other forms of gambling. Below are steps to help you manage your tax obligations:

1. Ensure the online gambling operator has your information

• More often than not online casinos and sports betting sites require your ID and Social Security Number (SSN) before they pay out significant winnings.
• This information is used to generate a W-2G, which helps the gambling operator withhold applicable federal taxes and declare your winnings to the IRS.

2. Check who pays the IRS

• While Delaware state does not withhold taxes on gambling winnings, the reality is that federal tax laws still apply. So when it comes to gambling winnings that exceed $5,000, federal regulations mandate a 24% withholding rate. 
• Therefore, even though Delaware doesn’t withhold state taxes on these winnings, the federal withholding requirement remains in effect.

3. Wait for your W-2G form

• If your winnings meet the amounts in the table above, you should receive a W-2G form from the gambling operator. This form keeps track of your winnings and any taxes withheld.
• If you qualify but don’t receive a W-2G, you should contact the casino or sportsbook to request it.

4. File your Delaware state taxes

• Use Delaware Form 200-01 to report gambling winnings as part of your state-taxable income.
• For non-residents, use Delaware Form 200-02 to report any winnings derived from gambling within the state.

Tax breakdown for players in Delaware

Here’s a simple breakdown of gambling taxes for Delaware players:

Online casinos

1. You pay 24% federal tax if you win more than $1,200.
2. Delaware state tax is 2.2% to 6.6%, depending on how much total income you have. Refer to the first table on this page to see how your winnings fit into Delaware’s 2.2% to 6.6% tax brackets.
3. You’ll get a W-2G form if you win over $1,200.

Sports betting

1. Federal tax is 24% if you win over $600 or 300 times your bet.
2. Delaware tax is 2.2% to 6.6%.
3. You’ll get a W-2G form if you win over $600.

Sweepstakes casinos

1. You’ll pay 24% federal tax on any money you win.
2. Delaware state tax is between 2.2% and 6.6%, depending on how much income you have in total.
3. You won’t get a W-2G form, so you’ll need to keep track of your winnings and report them yourself.
4. Redeemed prizes are often reported on a Form 1099-MISC as “other income,” rather than gambling income.

Poker tournaments

1. Federal tax is 24% if your net winnings are more than $5,000 (after entry costs). For example: If you win $6,000 in a poker tournament and pay $1,000 entry to participate, your net winnings are $5,000. This ensures that only your actual winnings are subject to taxation.
2. Delaware tax is 2.2% to 6.6%.
3. You’ll get a W-2G form if your winnings are over $5,000.

Delaware lottery

1. While Delaware operates a lottery, they do not impose taxes on lottery winnings.

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

If you don’t report gambling winnings in Delaware, you could be liable for fines, penalties, and interest on taxes not paid. If you’ve received a W-2G form from the online casino or sportsbook, then the IRS is already aware of your winnings. 

Overall, to remain compliant with Delaware state gambling taxes and avoid unnecessary penalties, keep a record of your winnings and report them promptly.

Delaware gambling sites by type — what’s legal?

Gambling in Delaware is fully regulated under the watchful eye of the Delaware Lottery. Online slots, casino table games, and poker are all legal in Delaware.

Delaware also legalized online sportsbooks – but so far, that isn’t available. William Hill does have a license for retail sports betting in Delaware, but the operator hasn’t yet ventured into the Delaware online sportsbook space. 

What is available is betting apps like Fliff where you can use Fliff Coin and Cash to place bets and earn points. With these points, you can claim vouchers for renowned companies such as Dominoes and Airbnb.

In Delaware, social and sweepstakes casinos are also allowed. Even though these aren’t legally classed as gambling they do offer an authentic gambling experience. These types of casinos are all play-for-fun casinos yet you can still deposit money in order to receive more virtual coins. 

Online casinos in Delaware Legal since 2012

There are three Delaware online casinos that are the digital counterparts of the three racinos in Dover, Harrington, and Wilmington. All three online casinos are very similar in what they offer as they are jointly operated by Scientific Games and 888 Holdings.

If you’ve ever been to an 888-operated online casino you’ll feel right at home as everything from the sign-up screen, to the lobby, to payments is the same. If you’re new, don’t worry as 888 is known for creating user-friendly casinos.

The selection of slots on offer is on the limited side and you won’t find some of the biggest slot providers here. However, there are around 14 progressive jackpot slots on offer. Table games are also available with a limited selection of blackJack, roulette, and video poker.

• Online counterparts to established and trusted land-based casinos
• Progressive jackpots available
• All three casinos offer the same bonuses and game selection

• A limited number of slots available
• No live casino available

Online poker Legal since 2012

Online casinos in Delaware offer more than just slots and table games. In 2012, online poker was legalized and is now regulated by the state lottery.

In 2014, poker also got a whole lot more interesting as Delaware was one of the states to sign the Multi-State Internet Gaming Agreement with Nevada. Later on, the state of New Jersey also signed the agreement.

This agreement makes it possible for players from the signature states to compete against each other. These pool of players is a lot bigger and of course, makes the game more interesting as players don’t have to wait around in empty lobbies for other poker players.

You can find online poker in Delaware at gambling sites that provide online slots and table games. You’ll need to download an app from the casino in order to play poker. All three online casinos in Delaware also offer a decent welcome bonus for poker players.

• Legal online poker
• Poker is legal both offline and online
• Play poker with players from other states

• Online poker bonuses are the same at all three casinos

Online betting sites

Delaware’s gambling history starts with sports betting, specifically betting on horse racing. All three of the land-based casinos are built right next to a racetrack and that is why they are known as racinos. There’s a lot of history of horse racing in the state, dating back to the 1920s when the Harrington Raceway was first inaugurated.

Since then, the management of sports betting has been taken up by the Delaware Lottery. Full-scale sports betting can only be done from the three land-based casinos. However, many retailers around Delaware are allowed to offer football parlay wagering.

Unfortunately, there’s some bad news for online gamblers: sports betting can only be done offline (even though online sportsbooks are legal in Delaware). No-one has yet taken the plunge into the Delaware online sports betting market.

• Sports betting is legal both online and offline
• Football Parlay Wagering available at retailers

• No online sportsbooks available

Other forms of gambling in Delaware

As with all gambling activities, the Delaware Lottery oversees all other types of gambling in Delaware. In the case of lottery game tickets, 30% of the ticket price goes towards the General Fund.

Since 1975, Delawareans have contributed a total of $5.6 billion dollars into this General Fund through their gambling activities, with money going towards education, social services, and the environment.

Offline gambling in Delaware

Since land-based and online gambling in Delaware is intertwined, we already gave a good overview of the three offline casinos in the state.

All the casinos in Delaware are known as racinos as they all have a racetrack attached to them. The oldest of racinothe Harrington Raceway & Casino which first opened its doors in 1920. The operator started out as a harness racetrack and it was only in 1996 that the slot parlor was added.

The Delaware Park Racetrack was established in 1937 and is the only racetrack where thoroughbred races are run between May and October. The casino has around 2,300 slots and two poker rooms.

Then there is the Dover Downs Hotel & Casino which opened in 1969 which started out as a speedway and horse track. Nowadays it’s home to more than 2000 slots and an 18-table poker room.

Delaware gambling and safety

The Delaware Lottery oversees all forms of gambling within the state. They are assisted by the Delaware Gaming Enforcement which was established through House Bill number 310 in the 145th General Assembly of the House of Representatives.

The Division of Gaming Enforcement has exclusive jurisdiction over criminal offenses relating to gambling in Delaware. They investigate all applicants requiring a gambling license and assist the Delaware Lottery in the application of rules and regulations relating to gambling.

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