Online gambling taxes in Ohio

Ohio has a few legal online gambling options, including sports betting, daily fantasy sports, horse race betting, and sweepstakes casinos. Online sportsbooks are fully legal and regulated; however, Ohio residents cannot place live prop wagers on college games.

Real-money online casinos and online poker are, however, currently illegal in the state of Ohio.

If you win money online in Ohio, you’ll have to pay Ohio state gaming taxes. All gambling winnings are taxed at a flat rate of 4%, and if you win more than $600, the state automatically withholds 4% of your winnings at the time of payout.

Is the tax rate different for each type of gambling?

Ohio taxes all money won online at a flat 4% rate, irrespective of the type of gambling. The state will apply the same 4% tax on winnings; however, the only difference is in withholding.

So, if you win more than $600, the online sportsbook will automatically hold back 4% of those winnings at the time of paying out your winnings. If you win under $600, the sportsbook won’t hold back anything; however, you still have to declare and pay the 4% tax when filing your Ohio state tax return.

It’s worth mentioning that some Ohio cities have additional taxes on gaming winnings. Here are the relevant cities and the tax rates applicable when winning money online in each one:

• Columbus: 2.5% for both residents and non-residents.
• Cleveland: 2% for residents.
• Cincinnati: 2.1% for both residents and non-residents.
• Toledo: 2.25% for both residents and non-residents, with a $2,500 exemption.

How does your income affect taxes in Ohio?

Your income does affect taxes in Ohio, especially when it comes to gambling winnings. Here’s how:

1. State income tax brackets

Ohio works on a tiered income tax system, meaning the more you earn, the higher the tax bracket you fall in. In 2024, the state tax rates range from 2.75% to 3.75% for those earning over $26,050.

If your total income is under $26,050, you won’t owe state income tax on anything (including money won online)

If your total income is above $26,050, your gambling winnings are added to your taxable income, and you’ll pay the applicable rate based on your income bracket.

2. Gambling winnings and Adjusted Gross Income (AGI)

All money won from gambling online counts as income and must be disclosed on your state tax return.

The more you win, the more your income increases and this pushes you into a higher tax bracket, meaning you’re liable for more taxes at the end of the day.

3. Deductions for gambling losses

Ohio does not allow you to deduct gambling losses on your state taxes.

However, on federal taxes, if you itemize deductions, you can write off losses up to the amount of your winnings.

4. Local city taxes

If you live or win money in Columbus, Cleveland, Cincinnati, or Toledo, you owe local taxes on top of the 4% state tax.

These city taxes are based on your income and must be paid regardless of whether your income is from gambling or your job.

Here’s a table showing what your income, plus gambling winnings tax rates, would look like:

So, in short, your total income affects how much tax you pay on gambling winnings in Ohio. If your winnings push you into a higher tax bracket, you could end up paying more state taxes overall.

How to pay gambling taxes in Ohio?

In this section, I’ll show you how to pay your Ohio state taxes if you win money gambling online:

1. Report all winnings

• For state taxes, you’re also liable for federal taxes. This must be reported and paid to the IRS. 
• In the event you win more than $600 playing at an online sportsbook, the platform will send you a W-2G form, and a copy will be sent to the IRS.

2. File federal taxes first

• It’s in your best interest to file your federal taxes before your state taxes. In order to do this, complete Form 1040, Schedule 1 under the “Additional Income” section.
• If taxes were withheld at the time of payout, this will be displayed on the W-2G form.
• As mentioned earlier, while you cannot deduct gambling losses together on your federal return, you can use Form 1040 to report them separately.

3. File your Ohio state tax return

• Next, you’ll need to complete your Ohio state tax return. All gambling winnings are regarded as taxable income, so you must report them on Ohio IT 1040.
• If you won under $600 at a sportsbook, then nothing would have been withheld. However, you still need to calculate and pay the 4% tax when filing your state tax return.
• Also, keep in mind that if you live in Columbus, Cincinnati, or Toledo, then you need to also pay local gambling taxes.

4. Pay estimated taxes

• If you won a large sum of money gambling online, but the sportsbook did not withhold a percentage, then you need to make estimated quarterly tax payments.
• You can do so by completing Form IT 1040-ES and sending payments throughout the year.
• The IRS also requires quarterly estimated tax payments, but only if your estimated taxes are $1,000 or more in federal taxes.

5. Choose how to pay

• You can choose to pay your Ohio state taxes by mail or online.
• Simply go to the Ohio Department of Taxation’s website and pay your taxes using one of the available payment methods.
• If you live in one of the cities that apply local taxes, then you need to go to your city’s tax portal and make payments there.

Tax breakdown for players in Ohio

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

Sports betting sites

• Federal tax: 24% if you win over $600 or 300x your bet.
• Ohio state tax: 4% on all winnings.
• Local tax: If you live in Columbus (2.5%), Cincinnati (2.1%), Cleveland (2%), or Toledo (2.25%), you owe additional city taxes.
• W-2G form: You’ll get a W-2G form if you win over $600.

Sweepstakes sites

• Federal tax: 24% if you win more than $1,200.
• Ohio state tax: 4% on all gambling winnings.
• Local tax: If you live in Columbus (2.5%), Cincinnati (2.1%), Cleveland (2%), or Toledo (2.25%), you owe additional city taxes.
• W-2G form: You won’t get a W-2G form from sweepstakes casinos, so you must track and report your winnings yourself.

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

If you fail to report and pay Ohio state taxes, as well as federal taxes, then you could be liable for fines and penalties. This is more so if the IRS decides to do an audit on you and finds that you’ve been withholding gambling winnings taxes. 

They may also impose possible interest charges, and the state of Ohio may also impose penalties. This means that you may be liable for even more than what you owe. Therefore, it’s in your best interest to keep track of all your online gaming winnings and make sure you openly disclose and pay taxes in the state of Ohio.

Online casinos Not yet legal

Does Ohio allow online gambling? Online gambling in Ohio doesn’t include online casinos for real money at this moment in time. However, with Ohio recently introducing sports betting legislation and horse racing, it might just be a matter of time for the state to also regulate slots and table casino games.

Until that happens, players in Ohio can opt to play casino games at sweepstakes casinos like Wow Vegas or maybe even at social casinos like BetRivers.net. These types of casinos offer the same online gaming experience you’d find in other states. The only difference is that you don’t play for real money.

At social casinos, you can play for free, but there’s no money to withdraw. At sweepstakes casinos, you can still play for free, but you have a chance to convert your virtual coins into redeemable prizes.

Online betting sites Legal since 2021

In December 2021, House Bill 29 was signed into law, which was the first step to online gambling in Ohio. It took until January 2023 for Ohio gambling laws to come to fruition.

In just a few days, Ohio saw significant sports betting sites moving into the state – this was because the law wanted all the different operators to launch simultaneously. The licensing process is ongoing, and we may see other sportsbooks entering the Ohio arena. In the meantime, social sites like Fliff sportsbook offer some more variety.

What else is legal in the state?

Ohio gambling laws have quickly caught up with the times when it comes to sports. However, we’re still seeing some movement in the Buckeye state regarding casino play. As for the gambling age in Ohio, this tends to vary according to which type of activity you want to go for.

While the gambling age in Ohio for casino and sports betting is 21 years old, 16-year-olds can legally play bingo offline. Most other activities, including lottery and horse racing, have a legal age of 18 years.

• Poker: This popular table game has yet to be available online. However, land-based casinos can offer poker games with different stakes and buy-ins. Private poker at unregulated establishments is also considered illegal.
•  Lottery: The gambling age in Ohio to play the lottery is 18 years old. So far, an online lottery is yet to be available in the state. Offline you can get your tickets from authorized retailers. You can play in eight different lotteries, including Powerball and MegaMillions. Progressive jackpot games and Keno are also available.
• Daily Fantasy Sports: DFS betting was introduced in 2018, but it took until 2020 to be available online to players in the Buckeye state. Players can now choose from websites such as DraftKings DFS and FanDuel. 
•  Bingo: All bingo games in the state are highly regulated and can only be conducted by charitable organizations and used as fundraising tools.

Is online gambling in Ohio safe?

Yes, gambling in Ohio is safe if you do this at licensed operators. Remember that the state regulates only sports betting and horse racing. Online casino games like slots, poker, and table games are not.

So if you find yourself gambling on any casino games in Ohio, there’s a chance you’re doing this at an offshore casino. Offshore casinos aren’t bad as such, but they are not under any scrutiny of US jurisdiction which keeps you safe.

Here at Time2play, we’ll only point you towards those operators licensed in the US, in this case, legal Ohio gambling sites.

FAQs

Sources

• https://www.betohio.com/gambling-winnings-tax/
• https://www.findlaw.com/state/ohio-law/ohio-gambling-tax-laws.html
• https://turbotax.intuit.com/tax-tips/jobs-and-career/how-to-pay-taxes-on-gambling-winnings-and-losses/L7JNH7mjn
• https://www.playohio.com/