Indiana online gambling taxes

Online gambling winnings obtained from online sportsbooks or sweepstakes casinos are fully taxable. The personal income tax rate in Indiana is 3.00%, which is a reduced rate compared to the 3.15% that was due in 2023. Aside from Indiana state tax, the IRS withholds 24% of all gaming winnings that exceed $5,000.

It’s important to know that although Indiana’s state income tax rate is fixed at 3.00%, individual taxes will vary due to additional county-level income taxes. As it stands, Indiana has approximately 92 counties, each with its own county-level income tax rate.

Is the tax rate different for each type of gambling?

No, the tax rate for both legal forms of gaming is a fixed rate of 3.00%. However, since Indiana requires a county-level tax as well, your overall tax rate is ultimately determined by the county in which you reside. 

Calculation example for Allen County:

1. Federal tax: $5,000 × 24% = $1,200.00
2. State tax: $5,000 × 3.00% = $150.00
3. County tax: $5,000 × 1.59% = $79.50
4. Total taxes: $1,200.00 (Federal) + $150.00 (State) + $79.50 (County) = $1,429.50
5. Net winnings: $5,000 – $1,429.50 = $3,570.50

The table below provides an example of what your final taxes look like when you combine the federal tax rate, and Indiana state tax with county tax on $5,000 online gambling winnings:

How does your income affect taxes in Indiana?

While the state income tax rate is fixed at 3.00% and remains constant regardless of your income level, county income tax rates do apply. Each county sets its own rates; however, these rates are not progressive and are fixed percentages, which differ from one county to another. 

The table below consolidates income details, tax rates, and tax calculations, as well as net income after taxes, for a resident in Allen County, Indiana. Calculations are based on an employment income of $50,000, plus gambling winnings of $6,000:

How to pay gambling taxes in Indiana?

All gambling winnings in Indiana are fully taxable, whether from sports betting platforms or sweepstakes casinos. All relevant forms required for submitting taxes in Indiana may be found on the Indiana Department of Revenue platform. Below are the steps needed to help manage your tax obligations in Indiana:

1. Report your total earnings

You’ll need to report your total earnings, including all qualifying gambling winnings during the year, on Form 1040. Complete the federal Form W-2G you receive from the gaming establishment, add up your winnings plus the amount of tax that was withheld, and then transfer the amount onto the 1040.

2. Understand who pays the IRS

If your winnings exceed $5,000, the sportsbooks or sweepstakes casinos will withhold 24% taxes from the money you won. Even if your winnings are under $5,000 and taxes were not withheld, you’ll still need to report it to the IRS at the end of the year.

3. File your Indiana state taxes

Indiana allows you to use Form W-2G for your state income tax return as well. Transfer the amount from Form 1040 to your IT-40. Even if your winnings came from outside the state of Indiana or you won by participating in lotteries based in other states, those winnings must be reported in your state income tax return.

Does Indiana allow gambling deductions for tax purposes?

Indiana does allow you to reduce your tax liability from money won online, provided you itemize your deductions on your tax return. However, this is only if you do not opt for the standard deduction on your return.

To reduce your tax liability by claiming gambling deductions, you’ll need to itemize your losses on Line 16 of Schedule A on Form 1040. Another exception is that you won’t be able to claim a deduction that is larger than your declared winnings.

Ultimately, you must be able to prove your gambling losses. You won’t be able to deduct any expenses that you incurred, including the amount of money you deposited and wagered. For more detailed information, you can refer to the IRS guidelines on gambling income and losses.

Tax breakdown for players in Indiana

Here’s a breakdown of how taxes work when it comes to the two legal forms of online gambling in Indiana:

Sports betting

For winnings exceeding $5,000, the online sportsbook will withhold 24% of the money you won, for federal income tax purposes. Additionally, if you’ve won more than $600, or you’ve been paid out at least 300 times the amount of your wager, then the sportsbook is once again required to issue you Form W-2G explaining your winnings.

The sportsbook will not hold back federal taxes, but you are still required to declare your winnings to the IRS, to remain on the right side of the law.

Sweepstakes casinos

Sweepstakes casino winnings are taxed in exactly the same way as sports betting winnings, since Indiana does not have different tax rates or varying thresholds for either one of these legal gaming verticals.

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

If you fail to report gambling winnings, the Indiana Department of Revenue may impose a penalty of 10% of the value of unpaid taxes. Additionally, you may incur interest on the unpaid taxes from the date you failed to make payment until the date that the tax is paid in full. 

That said, if you consistently fail to comply with tax obligations in the state of Indiana, it may result in further fines, including a battle with the IRS in case they conduct an audit and find that you’ve underreported. 

So keep track of your gambling winnings, report them in due time, and stay ahead of your tax obligations for a positive gambling experience in the Hoosier State.

Is online gambling legal in Indiana?

If you want to gamble in Indiana with no legal consequences, you can do so in land-based casinos, social casinos, sportsbooks, sports betting apps, land-based poker rooms, and racinos (horse racing and betting establishments).

Moreover, the gambling age in Indiana varies depending on the wagering activity. For instance, you can buy lottery tickets as soon as you turn 18, but you must be 21 to take part in sports betting.

Look at the table for a complete overview of legal gambling activities, including how old you must be to participate.

Online sports betting Legal since 2019

The Indiana online gambling ground is the best place if you’re into sports betting. Ever since the passing of the Bill in September 2019, both in-person and online sports betting activities have been legal. This includes Daily Fantasy Sports (DFS) as well. The first online bookie that launched was Gamble Indiana.

You can bet at land-based regulated sportsbooks, online sports betting sites, and mobile betting sites, as long as the Indiana Gambling Commission properly licenses them. To join any sportsbook within IN, you must be at least 21 years old. Residency and nationality aren’t considered as long as you’re in the territory of Indiana.

Social and sweeps casinos Online alternatives to real-money casinos

While betting fans can make the most of the online sportsbooks, the Indiana gambling laws are rather strict with online casinos. In the meantime, land-based casinos are available.

Even though this is somewhat disappointing for players on the go, Indiana residents may still enjoy their favorite casino games while remaining within the legal framework.

The one way you can gamble online in Indiana is by joining the sweepstakes available to IN gamers. The sweeps casino idea lets you purchase Gold Coins (GC) to use on the reel machines, cards, and table games.

With a little bit of luck while spinning the reels, you will get Sweeps Coins, which you can later exchange for cash. So, even though they are not as straightforward as online casinos, the sweepstakes are the perfect substitute, and they’re legal!

On the other hand, if you’re looking for free gaming, you can do so in social casinos like BetRivers.net social casino and Pulsz social casino. You can think of social apps as a free alternative to online gaming sites.

• You’re staying within the legal frame while playing casino games
• You can wager real money and win cash prizes
• You have access to an abundance of games
• Most sweepstakes have recurring bonuses

• More limited game array than online casinos
• Live support isn’t common
• The choice of sweepstakes is limited

Online poker Available at social casinos

Similar to the status of online gambling in Indiana online casinos, online poker is not legal yet either. The upside is that you can still play it from your mobile or desktop PC at social casinos.

Your other option while in Hoosier State is to play video poker in land-based casinos. Of course, you could play it at home with friends too, but if you’re looking for something you could do over the Internet, then social casinos are your only (legal) option.

Gambling laws in Indiana

Is online gambling legal in Indiana? The gambling laws in the country vary depending on the type of wagering activity. For instance, sports betting is legal online and offline, while the lottery is legal only in person. Let’s look at what the betting regulations say in 2023.

Land-based Indiana gambling

You want to gamble in Indiana? If casinos are your go-to thing, then you’ll be happy to hear that IN has much to offer. Apart from the state’s lottery, parimutuel betting, and sports wagering, land-based casinos have an operating license too.

Indiana’s legislation allows for 10 land-based or riverboat casinos on Lake Michigan and the Ohio River, one in French Lick. Plus, there are racinos at the state’s 2 horse races and 1 Indian casino.

In these establishments, you’ll be able to enjoy over 2,000 slot machines, video poker, and table games.

Gambling regulators

The safety of our T2players is among our biggest concerns, which is why we’ve taken a close look at Indiana’s top auditors.

The Indiana Gaming Commission (IGC) is the state’s government regulatory body that is responsible for overseeing all online, land-based, and riverboat casinos. Additionally, there’s a Sports Wagering and Paid Fantasy Sports Division that’s responsible for regulating these wagering activities.

If you find an  Indiana online gambling site with a valid IGC stamp, you can rest assured you’re in good hands.

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