Do I owe Ohio state tax on sports betting and gambling winnings?
By the W2gMatch team · Sources checked 09-06-2026 · General information, not tax advice.
Yes, and Ohio allows no deduction for losses. Ohio taxes gambling winnings as part of federal adjusted gross income at its 2026 flat rate of 2.75% above the first $26,050, with municipal income tax often added. Casinos, sportsbooks and the lottery withhold 2.75% from winnings that meet the federal W-2G reporting threshold. Sports gaming winnings from bets placed in Ohio are Ohio income regardless of residency.
How Ohio taxes the winnings
Ohio income tax starts from federal adjusted gross income, so every gambling win is in the base. For tax year 2026 Ohio reached a flat 2.75% on taxable income above $26,050, with income at or below that line untaxed. [1] Most Ohio cities levy a municipal income tax on top, and the municipal code separately provides for withholding from casino, lottery and sports gaming winnings.
Losses on the Ohio return
Ohio has no itemized deductions and its Schedule of Adjustments has no line for gambling losses, so a federal itemized deduction for losses has no effect on Ohio taxable income. [2] A break-even year is taxed on the gross winnings at the state rate, and again by the municipality where one applies.
What is withheld at the window
Sports gaming proprietors “must take out 2.75% of winnings if winnings meet IRS reporting requirements (IRC 6041),” citing Ohio Revised Code 5747.062, 5747.063 and 5747.064. [3] Section 5747.063 sets the casino and sports gaming rate at “two and three-quarters per cent for calendar year 2026 and thereafter,” down from three and one-eighth percent for late 2025. [4] The lottery withholds on the same schedule. Because the trigger is the federal reporting threshold rather than the federal withholding threshold, an Ohio W-2G usually carries state withholding even when box 4 is empty.
Residents, part-year residents and visitors
Residents are taxed on winnings from everywhere. Winnings from sports gaming conducted in Ohio, and from Ohio casinos and the Ohio Lottery, are Ohio-source income for nonresidents, who file the nonresident schedule and claim the withholding. Sports gaming winnings from bets placed in Ohio are allocated to Ohio regardless of the bettor's state of residence.
What is legal in Ohio, and who sends the forms
Ohio sports betting began January 1, 2023 under House Bill 29, through online proprietors, in-person sportsbooks and lottery kiosks; the Casino Control Commission licenses operators and the Department of Taxation administers the withholding. [3]
The federal return underneath
Federal: for tax years beginning in 2026, only 90% of gambling losses are deductible (the 90% gambling loss cap).
Every state page sits on the same federal rules: all winnings are reported on Schedule 1 whether or not a form arrives, and losses are an itemized deduction capped at winnings and, from 2026, at 90% of losses under amended section 165(d). The federal loss page and the by-state table show how Ohio compares.
Related questions
Can I deduct gambling losses on my Ohio return?
No. Ohio starts from federal AGI and its Schedule of Adjustments has no gambling-loss line, so federal itemized losses do not reduce Ohio tax.
Why did my Ohio sportsbook withhold state tax when no federal tax was withheld?
Ohio withholds 2.75% from any win that meets the federal W-2G reporting threshold, which is lower than the federal withholding threshold.
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Sources
- Kirsch CPA, Ohio income tax changes: 2.75% flat rate for tax year 2026, 2025 (secondary source)
- LegalClarity, How to deduct gambling losses on your Ohio tax return (Ohio has no gambling-loss adjustment), read September 6, 2026 (secondary source)
- Ohio Department of Taxation, Employer Withholding: Gaming Withholding, read September 6, 2026
- Ohio Revised Code § 5747.063, withholding from casino and sports gaming winnings, effective September 30, 2025
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.