Please help - new bettor, simple tax question?

technically, pretty sure you owe AZ taxes if you won moneys playing DK there.

practically, DK will probably send you a 1099 for your net winnings on the year to your registered ME address. seems unlikely AZ would be aware or chase you down and more likely ME would look you up if you shifted tax liabilities on winnings to AZ and reported less net income to ME.

AZ income tax is lower. i don't know what either state's thresholds for reporting are.

this is neither legal nor formal tax advice and i have no knowledge of DK's tax reporting machinery. certainly if it's for any decent chunk of money you should consult tax professional.

I would think that unless he is using some AZ-only ecosystem while in Arizona, that Arizona wouldn't have any claim to the winnings on bets he placed while there. If you are on a road trip and trade a stock while passing through AZ, you wouldn't have to file taxes there.

Thank you for the answer, I appreciate it! One more question, if you don't mind: unfortunately, I don't have to worry about net winnings. I made a lot of stupid, typical mistakes when I started sports betting a few months ago, so I lost a lot. And then lost some more. I went into it without thinking, and there is no one to blame but me. :( Anyways....I am definitely going to consult an accountant, but in the meantime, do you know how that works? If I had some wins, but more losses, will I have to worry about tax implications at the end of the year if overall I am in the negative? Again, no worries, I won't hold your answer as gospel, just curious what you know from your experience.
Thank you!

An Arizona-only ecosystem. I mean like if you went to Arizona and played their state lottery and won some amount, I could see how they would lay claim to taxing your winnings. But if you just happened to be in Arizona while betting on a French soccer game, that doesn't really have anything to do with them.

And I'm not an expert on BS tax shakedowns, but you shouldn't have to pay tax on any gambling income if it's less than losses. So if you made 100 even-money $50 bets and won 40 of them, so you "won" $2000 while losing $3000, for a net loss of $1000, no sane tax system would say that you owe tax on the $2000.

you may be right. think it technically does have something to do with them since DK licenses on state-by-state basis and has to geolocate you to confirm you're in that state before accepting wagers. each state has their own set of rules regarding what types of bets are allowed when placing wagers there. don't think this is true regarding brokerage accounts, to contrast with your stock trading example. none of this is tax advice.

OP: AZ's threshold for filing is $15k, so if your potential winnings are capped lower than that you shouldn't need to worry about AZ reporting regardless

problem is US tax code is overly complicated: technically you need to report all winnings and losses separately. if you want to deduct losses against winnings, you have to itemize, which means you don't get standard deduction. not a problem if you're already itemizing (common if paying a mortgage), but can be costly if you otherwise wouldve taken standard deduction. leads to a sad affair for many casual gamblers who are net losers on the year but received 1099s/w-2g and end up eating it because the benefit of std deduction > tax savings from deducting losses.

Thank you for the reply, it sounds like you really know what you're talking about. We (wife and I) have been taking the standard deduction up to now, but after my stupid, wild, irresponsible nightmare that I created by doing this idiot betting, I think we don't have a choice but itemize for this year. I kept a spreadsheet with all my bets, and there were A LOT of them, I must shamefully admit. So if in all my bets I show that I "won" $400,00, but then lost $500,000 in the losing bets, it would be nuts not to itemize, right? I would have to pay taxes on the $400k? (I am going to of course consult a tax accountant regarding this, but for now, I wanted to hopefully get a little piece of mind or some advice from someone that has dealt with this in their life). Thank you so much again!!

Yes, smartDFS is correct. Note that you can only deduct losses up to the extent of your winnings. So in your example, you'd show $400k in winning and $500k in losses but only $400k of that would be deductible netting out to $0 in winnings. It's a record keeping nightmare and results in unfavorable tax treatment. It's a lose-lose situation and yet another reason people should never gamble recreationally IMO.

When I used to place legal wagers in Oregon (I am a resident of Washington State), I would get a W2-G from the state of Oregon and I had to file an Oregon State tax return (they have an income tax in that state). It sucked and after a year or two of doing so, despite showing a net profit it very quickly became not worth it to me.

I highly recommend not gambling but if you insist use offshore bookmakers. The only exception to this is bonus whoring new customer promotions in each state such that you're almost surely to be a net winner.

It's worst than you think. At those high Gross incomes, you may trigger the Alternate Minimum Tax and pay a higher tax rate, even if you lost money gambling. Also, you could lose money gambling and still owe taxes even at lower gross incomes. For example, if you would have had $10,000 in itemized deductions without gambling, you would take the standard deduction of $29,200 for a married couple. If you you have $100,000 in gross winnings, and $120,000 in gross losses, your gross income would increase by $100K. Your itemized deductions would be $100K (not $120K) + $10K, for a total of $110K in itemized deductions. Your gross income went up $100K but your itemized deductions went up only $110K - 29.2K = $80.8K. So you would be paying taxes on $19.2K of additional gambling income, even though you lost $20K gambling.