Most players get some sort of free play from the casino. But is there a liability?
Is free play taxable? Jay F.
Jay F.
(As a reminder, we’re not accountants, and this should not be considered a substitute for accounting advice. Please discuss any tax questions with your accountant!)
Free play is not taxable, but winnings on free play is taxable.
The IRS considers any gambling winnings (regardless of whether or not you received a tax form) as income. It doesn’t discriminate in terms of what sort of wager was made to receive the money, so that means any winnings on free play would also be taxable, just as it would be on any winnings won with cash wagers.
Casinos will also include these winnings on your win/loss, so it does get documented as part of your overall play at a given casino. We know many players use this as a way to gut check their wins and losses calculations when preparing their taxes for the year, so it helps to know those winnings will be in that reporting as well.
We encourage players to check out our previous articles on the topic of taxes, as they cover a number of aspects many players get shaky advice in some places online about how taxes work for gambling winnings:
- Can You Write Off Gambling Losses on Taxes?
- Do You Pay Taxes on Cruise Ship Casino Winnings?
- Should You Have Taxes Deducted on a Jackpot?
And as we said upfront, regular gamblers should work with an accountant to get things right. While it may not be the sort of investment most of us are particularly excited to make, getting it right will avoid a lot of headaches later if you’re ever audited.
Many of those sharing tax advice online are confident they’re right because their return was accepted, but that’s not the same thing as getting audited and having to back up what you filed. It’s better to do it right the first time than to risk a penalty down the road.
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