dfs · learn
DFS Taxes 2026: How to Report DraftKings and FanDuel Winnings
Last Updated: March 1, 2026
DFS winnings are taxable income under federal law, regardless of whether you receive a 1099 form. DraftKings and FanDuel issue 1099-MISC forms to players whose net winnings reach $600 or more in a calendar year. The 2026 tax year introduces new thresholds and reporting rules that affect how you file.
Last Updated: March 2026
This is general information, not tax advice. Consult a qualified CPA for your specific situation.
Key Takeaways
- All DFS winnings are taxable income — the $600 threshold only triggers a 1099-MISC from the platform, not a tax obligation.
- Most recreational DFS players report net winnings as “Other Income” on Schedule 1 (Line 8z), not as gambling income on Schedule A.
- The 2026 OBBBA (Online Betting and Bingo Benefits Act) introduces a 90% rule that caps recreational gambling loss deductions at 90% of winnings.
- Professional DFS players filing on Schedule C can deduct entry fees, research tools, and other business expenses against DFS income.
- The W-2G reporting threshold changed to $2,000 for 2026, though this primarily affects casino-style payouts rather than DFS contests.
How Does the IRS Classify DFS Income?
The IRS has not issued specific guidance classifying DFS as gambling or skill-based income. In practice, most tax professionals treat DFS winnings as “Other Income” reported on Schedule 1, Line 8z of Form 1040. This differs from traditional gambling winnings, which are typically reported on Schedule A as gambling income.
The classification matters because it determines which deductions are available to you. If DFS income is classified as gambling, losses are deductible only if you itemize on Schedule A and only up to the amount of gambling winnings. If classified as other income, the deduction rules differ by filing approach. For a deeper look at how DFS works and what qualifies as a contest, see our guide to daily fantasy sports.
What Forms Will DraftKings and FanDuel Send?
DFS platforms are required to issue a 1099-MISC to any player whose net winnings (deposits minus withdrawals plus account balance change) equal or exceed $600 in a calendar year. This form reports your net profit, not your gross contest entries.
| Form | Trigger | What It Reports | Who Files |
|---|---|---|---|
| 1099-MISC | Net winnings ≥ $600 | Net DFS profit for the year | DraftKings, FanDuel, other platforms |
| W-2G | Single payout ≥ $2,000 (2026) | Individual large payouts | Platform (rare for DFS) |
| Schedule 1, Line 8z | Any DFS income | ”Other Income” — net winnings | Recreational players |
| Schedule C | Professional DFS activity | Self-employment income | Professional DFS players |
The W-2G threshold changed to $2,000 for tax year 2026. Previously set at $1,200 for certain gaming activities, this threshold primarily applies to slot jackpots and keno payouts. DFS contest winnings rarely trigger a W-2G unless a single contest payout exceeds the threshold.
If you play on multiple platforms, each platform calculates its 1099 independently. A player who nets $400 on DraftKings and $300 on FanDuel would not receive a 1099 from either platform — but still owes taxes on the combined $700.
How Should Recreational vs. Professional DFS Players File?
The distinction between recreational and professional DFS players has significant tax implications. The IRS uses several factors to determine professional status: frequency of play, time invested, reliance on DFS income, and whether you operate in a businesslike manner.
| Factor | Recreational (Schedule 1) | Professional (Schedule C) |
|---|---|---|
| Where to report income | Schedule 1, Line 8z | Schedule C |
| Entry fee deductions | Limited — see 90% rule | Fully deductible as business expense |
| Research tools/subscriptions | Not deductible | Deductible |
| Home office deduction | Not available | Available if qualified |
| Self-employment tax | Not applicable | 15.3% on net profit |
| Loss carryforward | Not available | Available |
| 2026 OBBBA 90% rule | Applies | Does not apply |
The 2026 OBBBA 90% rule is the most significant change for recreational players. Under this provision, recreational gambling loss deductions are capped at 90% of gambling winnings. If you win $10,000 and lose $12,000, you can only deduct $9,000 (90% of $10,000) rather than the full $10,000. This creates a tax liability on $1,000 of phantom income.
Professional status is a double-edged sword. You gain full expense deductions but owe self-employment tax (15.3%) on net profit. For players earning under $20,000 annually from DFS, the self-employment tax often exceeds the deduction benefit. Use our gambling tax calculator to estimate your specific liability.
What About State Taxes on DFS?
State tax treatment of DFS varies widely. Some states follow federal classification; others treat DFS explicitly as gambling income with different rules.
States with no income tax (Texas, Florida, Nevada, Wyoming, Tennessee, Washington, Alaska, South Dakota, New Hampshire) impose no state-level DFS tax. However, several states that do levy income tax also add specific reporting requirements for DFS. New York, for instance, treats DFS winnings as gambling income at the state level even if you report it as other income federally.
Multi-state players face additional complexity. If you enter a contest while physically located in a state that taxes DFS income, that state may claim taxing authority regardless of your home state. This is an evolving area of tax law with limited enforcement precedent.
How Do You Track DFS Income for Tax Purposes?
Accurate record-keeping is essential. Platforms provide annual win/loss statements, but these may not capture your complete picture — especially if you play on multiple sites or transferred funds between platforms mid-year.
Track these data points throughout the year: entry fees paid per contest, winnings received per contest, deposits and withdrawals by date, and any DFS-related expenses (subscriptions, data tools, internet costs for professional filers). Our dataset tracks pricing and volume across DFS-adjacent markets on multiple platforms — use the Odds Reference dashboard to monitor the broader landscape. Similar discipline in tracking your own DFS financial data will simplify tax season.
For pick’em style contests, which are growing rapidly on platforms like Underdog and PrizePicks, the same 1099-MISC rules apply. See our pick’em tax guide for product-specific details.
FAQ
Q: Do I owe taxes on DFS winnings under $600?
A: Yes. The $600 threshold only determines whether DraftKings or FanDuel issues you a 1099 form. All DFS winnings are taxable regardless of amount. If you net $200 across a season, that $200 is reportable income on your federal return. The IRS expects taxpayers to report all income even without receiving a 1099.
Q: Is DFS income classified as gambling income?
A: The IRS has not issued definitive guidance. Most tax professionals classify DFS as “Other Income” on Schedule 1, not gambling income on Schedule A. This distinction matters because gambling losses are only deductible if you itemize. Some states treat DFS explicitly as gambling, which may affect your state return.
Q: Can I deduct DFS losses?
A: It depends on your filing status. If you file as a professional DFS player on Schedule C, you can deduct losses and business expenses against DFS income. Recreational players reporting on Schedule 1 have limited loss deduction options. The 2026 OBBBA 90% rule further restricts recreational gambling loss deductions. Consult a CPA for your situation.