Online gambling laws and taxes in Virginia

Written by Denise Mathey

Checked by Paul P.

Online gambling in Virginia still has some ways to go, as real-money casino sites are yet to see the green light. But it’s not all bad for players in the Old Dominion State.

Since 2021, online sports betting sites have gone live and social casino gambling is steadily on the rise. I take a deep dive into Virginia’s gambling landscape, and provide expert advice on how to pay your Virginia gambling taxes.

Legal gambling states

• Virginia gambling taxes
• Tax rates
• Income tax rates
• Paying gambling taxes
• Tax breakdown
• Undisclosed winnings
• What’s legal
• Virginia sports betting
• Virginia sweepstakes
• Virginia online poker
• Other gambling
• Offline casinos
• How to choose
• FAQs

Virginia online gambling taxes

Currently, online sports betting, daily fantasy sports, and horse racing are the only legal options in the state of Virginia (VA). 

State residents are also free to participate in the online lottery, which allows you to play games like Mega Millions and Powerball, as well as instant win games online. However, you will need to be at least 18 years of age and physically located in VA.

Online casinos and online poker rooms are illegal in the state; that said, Virginia players are free to participate in sweepstakes casinos and sweepstakes poker sites, since they allow you to play using virtual currencies and not real money.

As of 2025, Virginia’s state income tax rates range from 2% to 5.75%, and yes, gambling winnings are considered taxable income.

Is the tax rate different for each type of gambling?

The tax rate is the same for all legal gambling winnings in VA. Since VA has a graduated tax system, you’ll pay anywhere between 2% to 5.75%. For lottery prizes exceeding $5,000, the state requires a withholding of 4% on the entire prize amount.

Additionally, winnings are subject to federal tax withholding of 24% on gambling winnings exceeding $5,000; and this is withheld immediately or at the time of payout.

How does your income affect taxes in Virginia?

Virginia uses a graduated income tax system, meaning the tax rate increases as your income rises. There are four tax brackets:​

• 2% on income up to $3,000
• 3% on income between $3,001 and $5,000
• 5% on income between $5,001 and $17,000
• 5.75% on income over $17,000

How it works:

Your income is taxed in segments according to these brackets. For example, if your total income from your job and money won online is $50,000:

• The first $3,000 will be taxed at 2%, resulting in $60.​
• The next $2,000 (from $3,001 to $5,000) will be taxed at 3%, adding $60.​
• The following $12,000 (from $5,001 to $17,000) will be taxed at 5%, adding $600.​
• The remaining $33,000 (from $17,001 to $50,000) will be taxed at 5.75%, adding $1,897.50.​

Combining these amounts gives a total state tax of $2,617.50. ​

Standard deduction:

Virginia offers a standard deduction to reduce your taxable income:

• $8,000 for single filers
• $16,000 for married couples filing jointly​

When you file your Virginia state taxes, you can choose between the standard deduction or listing your deductions. If you opt for the standard deduction, the respective amount ($8,000 or $16,000) is subtracted from your gross income, reducing your taxable income.

So as your income goes up, you’ll start falling into higher tax brackets, leading to a higher overall tax rate. However, VA’s top rate of 5.75% is still relatively modest compared to some other states like California with a 13.3% rate, Hawaii with an 11% tax rate, and New York, coming in at 10.9%.

How to pay gambling taxes in Virginia?

Here’s how to manage your Virginia tax obligations and remain compliant:

1. Keep track of all your winnings

• Whether you’re betting on sports or playing sweepstakes games, write everything down.
• Save screenshots, receipts, or account statements showing wins and dates.

2. Look out for Form W-2G

• If you win big (like $600+ in some cases), the sportsbook might send you a Form W-2G.
• This form shows how much you won and what taxes, if any, were already taken out.

3. Report your winnings on your federal tax return

• All gambling winnings count as income.
• Add them under “Other Income” on your IRS tax return when completing Form 1040.

4. Report your winnings on your Virginia state tax return

• Use your total gambling income when filling out your Form 760, which is your VA state return.
• Virginia taxes winnings at the same rate as your regular income (2% to 5.75%).

5. Check if any taxes were already withheld

• Big wins ($5,000+) might already have 24% taken out for federal tax, and 4% for state tax (for lottery wins).
• You’ll still need to report the full amount, but you can subtract the withheld portion when filing.

6. Pay estimated taxes if needed

• If not enough tax was taken out of your winnings during the year, you might need to make quarterly payments to avoid Internal Revenue Service (IRS) penalties.

7. File your returns by the deadline

• Federal and Virginia state tax returns are due April 15th
• You can file taxes online through the IRS site or via the Virginia Department of Taxation site.

Tax breakdown for players in Virginia

The tiered tax rate applies to all gambling winnings in VA, except for lottery winnings. If you win more than $5,000 playing the Virginia Lottery, 4% will be held back and you’ll receive a payout of the balance.

Sports betting

• Federal tax is 24% if you win over $600 and it’s 300x your bet.
• Virginia state tax is 2% to 5.75%, depending on your total income.
• You’ll get a W-2G form if the bet meets the IRS rules (usually over $600 with big odds).

Sweepstakes casinos

• You’ll pay 24% federal tax on any winnings you redeem for cash or prizes.
• Virginia state tax is 2% to 5.75%, based on your total income.
• You won’t get a W-2G form, so it’s up to you to track and report everything.
• Redeemed prizes are usually reported on a Form 1099-MISC as “other income,” not gambling income.

Online poker tournaments (sweepstakes)

• Federal tax is 24% on net winnings over $5,000 (after subtracting your entry fee).
• Virginia taxes it as regular income (2% to 5.75%).
• In a rare case where you’re issued a 1099-MISC (like for a prize), that counts as other income too.

Virginia Lottery

• Federal tax of 24% withheld on prizes over $5,000.
• Virginia state tax: 4% withheld at the time of payout.
• You’ll get a W-2G for wins over $600.
• All lottery winnings must still be reported on your tax return.

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

If you don’t report the money you win in Virginia, both the IRS and the state could come knocking. If you win over $600, the sportsbook might send you a W-2G form, and the IRS gets a copy too. So if you leave it off your tax return, they’ll notice. That could lead to extra tax bills, late payment penalties, and interest. And if you make a habit of it, you’re putting yourself at risk of an audit.

Virginia doesn’t play around either. All gambling winnings are taxed like regular income, so if you skip reporting them, the state tax department might catch it, even if the IRS doesn’t. Again, this means more penalties and more interest.

So we recommend that you just report everything, and keep good records, and if you forgot to report something from last year, it’s better to file an amendment than hope no one notices.

Is online gambling legal in Virginia?

Unlike with West Virginia gambling, the question ‘is online gambling legal in Virginia’, doesn’t come with a simple answer. Even though the industry is rapidly expanding across the US, Virginia online casinos are still not considered legal here.

The only way to play legalized real money betting without falling foul of gambling laws in VA is via online sportsbooks. So, players are free to place wagers on sports via the internet, but they cannot play real money games. However, social casino gambling is perfectly legal as the law states that as long as the house doesn’t take an edge from the process, you can go ahead and spin those wheels.

Like many other US states, Virginia laws lay down a minimum legal gambling age of 21.

Online sports betting Legal since 2021

Even though not all types of gambling sites in Virginia are legal, sportsbetting is. Retail sportsbooks in this state were legalized on April 22, 2020, and online betting was launched in January 2021. Here’s how the state managed to greenlight betting sites.

After tons of efforts were made, the General Assembly and Senate of Virginia passed legislation to allow sports betting. The foundation for sports betting was thus laid down, making the Virginia Lottery the official sports betting regulator. After this form of gambling was given the green light, many of the most reputable sportsbooks in the US started applying for a license.

These days dozens of sportsbooks operate in this state, and statistics show that residents are pretty fond of placing online bets. For example, the total sports betting handled in May 2022 was $351.5 million, and the revenue reached $42.5 million.

• Well-regulated betting industry
• Dozens of operators are live
• Promotions are available

• Mobile betting is still unavailable

Sweeps casinos The best alternative to online casinos in VA

Virginia online casinos are still not permitted in this state, which is why players looking for legal casino games turn to social casinos and sweepstakes.

Social casinos are allowed in Virginia. If you are wondering what’s the difference between sweepstakes and social casinos, sweepstakes come with the opportunity for real rewards, while social casinos are basically ‘just for fun’ casino games.

Think of it as a demo version of casino gambling. You’re there to play the casino games, but you cannot win any real-money rewards. If you’re keen on learning more about how these work, you’ll find more information on our sweeps cash casinos page.

Compared to real-money online casinos, Virginia social casinos have fewer casino games to offer, but that doesn’t mean the quality is lower. You can still enjoy titles from some of the world’s most reputable providers, including NetEnt, Microgaming, Evolution Gaming, etc.

• Rewards can be won
• Completely legal
• Quality games are available

• No real money games

Online poker VA Available at social casinos

Poker is one of the most popular casino games because it requires a lot of skill and knowledge rather than just being focused on luck. Playing poker at real money casinos in the US from Virginia is not legal, but that doesn’t mean you cannot enjoy this casino game at social casinos.

To play it, you must make sure you know the rules. Since there are several variants of poker at social casinos (such as Casino Hold’em, Omaha, Omaha Hi-Lo, Caribbean Stud, etc.), some of the rules may vary, so pay attention to the details.

Other forms of online gambling in Virginia

When asking yourself is gambling legal in Virginia, you need to remember that actual gambling goes beyond online sportsbetting and social casino sites. Below, I have listed a few other forms of gambling.

Our experts also shared details about legality, available gambling types, and other questions that you may have. Let’s start breaking down the details.

Lottery

Lottery games are one of the oldest forms of wagering money in the world. You will be pleased to hear that betting on the lottery is available here, as it is a form of Virginia legalized gambling. The Virginia Lottery is an independent agency that was created in 1987 after a successful statewide referendum. Daily draw games include Pick 3 and 4; they are drawn twice each day. Cash 5 has one draw per day. All profits from ticket sales go towar

Bingo

Bingo is also a legal type of gaming in Virginia, but here’s the thing. This type of gaming must be sponsored by non-profit organizations. Of course, in order for a certain organization to organize bingo games, it needs to be licensed. As for players, if they wish to participate in this activity, they need to be at least 18 years old.

Horse racing

The horse racing industry and betting have gone side-by-side for as long as we can remember. This activity is available in Virginia, which is good for punters as they have far more betting options. Here’s the catchy thing about betting on horses, though. According to the Virginia online gambling laws, punters can wager on horse races in one of the three licensed operators – XpressBet, TVG, and TwinSpires. These operators also have a live stream

Daily Fantasy Sports

Daily fantasy sports betting has been legal in Virginia since 2016. This division is overseen by the Fantasy Sports Trade Association and the US Gaming Commission. There are tons of reputable operators that offer DFS betting services in Virginia, and all residents have to do is register an account at their preferred sportsbook and start placing bets.

DFS betting

Virginia gambling — land-based casinos

Online gambling in Virginia may be illegal, but the land-based gambling industry is legal and thriving. Several brick-and-mortar casinos are currently operating or are under construction in the state.

In November 2020, voters decided in favor of having 4 additional casinos in Virginia – Hard Rock Casino Bristol, Rivers Casino Portsmouth, Norfolk Resort & Casino, and Caesars Virginia, which will be located in Danville.

Hard Rock Casino in Bristol recently opened its doors, but the rest of the three casinos are still under development. Rivers Casino Portsmouth is set to open up in 2023, Norfolk Resort & Casino is slated to open in early 2023, whereas Caesars Virginia will likely open its doors in mid-2023.

According to the legislation of the state, a massive casino resort can be built in each of the following cities: Bristol, Portsmouth, Richmond, Norfolk, and Danville. As mentioned earlier, the residents in Danville, Bristol, Portsmouth, and Norfolk voted in favor of having a casino back in 2020, but the residents of Richmond voted against having a casino during the elections on November 2, 2021. As a side note, the legal Virginia gambling age at these properties is also 21.

Gambling regulators

Gambling regulators are in charge of making sure that the best Virginia online gambling sites meet the standards and operate according to the laws and regulations of the state. They license and oversee gambling sites in the state, providing players with a sense of security.

How? State-owned regulators are independent bodies whose sole purpose is to ‘force’ sites to work according to the laws. That way, the chances of a scam are brought to a bare minimum.

In Virginia, there’s just one regulator for gambling activities – the Virginia Lottery. The Virginia Lottery is an independent body whose executive director is appointed by the Governor. Apart from licensing and overseeing operators, the lottery is also responsible for equipment manufacturers, distributors, suppliers, and employees within the gambling sector.

The regulator was established in 1987 and all of its profits are used to fund the education sector. It organizes multi-state and Virginia-specific lottery games in which players over 18 can participate via retail or online channels.

All winnings in Virginia are subject to income taxes. Prizes over $5,000 come with a 24% federal tax and 4% state tax. The lottery issues federal form W2-G to winners who snatch a prize higher than $6,000.

Finally, the Virginia Lottery has a few programs under its belt – Thank a Teacher Art Contest, Made in Virginia, Making a Difference, and Super Teacher, which ran from 2008 to 2017. So far, the regulator has given more than $10 billion to public education.

It is worth noting that the horse racing industry is under the wing of the Virginia Racing Commission, which was established in 1989. The Virginia Racing Commission, or just VRC, was put in charge of sustaining, regulating, and growing the horse racing industry, together with the pari-mutuel betting services that come with it.

FAQs

Sources:

• https://learn.valur.com/virginia-income-tax/
• https://www.betvirginia.com/gambling-winnings-tax#:~:text=Gambling%20winnings%20are%20subject%20to,gambling%20winnings%20are%20considered%20income
• https://www.americangaming.org/wp-content/uploads/2021/03/AGAGamingRegulatoryFactSheet_Virginia-2022.pdf