Applying the 14.25% tax rate, Caesars would be liable to pay $2.1375 million in taxes to the state. Caesars: Suppose Caesars begins its online sportsbook operations in the state and generates $15 million in its initial year.Under the current tax rate, BetMGM would owe $2.85 million in taxes to the state of Kentucky. BetMGM: Assume that after BetMGM launches its online platform in Kentucky, it pulls in $20 million in revenue from online bets during its first year.

These companies, once they set up their online operations in the state, will be subject to Kentucky's sports betting tax rate of 14.25% for online sportsbooks.įor a more concrete understanding, let's consider hypothetical scenarios for these three sportsbooks: The sports betting landscape in Kentucky could potentially see the entry of notable sportsbooks such as BetMGM, Caesars, and DraftKings. Potential Tax Implications for Future Sportsbooks in Kentucky You may also receive a Form W-2G if you win more than $1,200 on a historical horse racing machine or win more than $600 on other types of gambling where the winnings are more than 300 times the amount wagered. Gambling providers in Kentucky are required by law to withhold 24% of your winnings as an advance payment to the IRS for any individual wins that equal or exceed $5,000, and they will also issue a Form W-2G as a record of both the win and the amount withheld. When it comes to federal tax obligations related to gambling winnings, the IRS is interested in the aggregate amount you win from gambling during a calendar year. Even a win of a single dollar is subject to taxation, with the total amount of your winnings in a given year being what matters for tax purposes. The Kentucky sports betting tax rate is set at 9.75% for retail sportsbooks and 14.25% for online sportsbooks. Remember, any gambling winnings you realize in Kentucky are considered income by every relevant taxing authority in the state (and the United States), and you are bound by law to report your gambling winnings and pay taxes on them much as you do any other income. Moreover, it's worth noting that you can deduct losses from your tax returns, but this process can be quite complicated. It is essential to comprehend your tax obligations to fulfill your legal responsibilities. This classification includes winnings from various forms of legal gambling such as horse racing, the Kentucky Lottery, and sports betting. In Kentucky, as in many other states, gambling winnings are considered taxable income.

Understanding Sports Gambling Taxes in Kentucky

Draftkings sportsbook tax rules