Here's a misconception that gets Ohio bettors in trouble: "If I bet on an offshore site, the IRS can't track it, so I don't have to report the winnings."
Wrong. Legally and practically wrong.
The IRS taxes gambling winnings regardless of where the sportsbook is located. And while offshore sites don't send W-2Gs, that doesn't mean your winnings are invisible to the government.
This article is educational information, not legal or tax advice. Consult a licensed CPA or tax attorney for guidance on your specific situation.
The Law Is Clear
IRS Publication 525 states that all gambling winnings are taxable income. It doesn't say "winnings from U.S. casinos" or "winnings reported on W-2G forms." It says all gambling winnings.
This includes:
- Winnings from Bovada, BetOnline, and other offshore sites
- Cryptocurrency deposits and withdrawals
- Winnings from poker games, fantasy sports, and esports
- Cash won in home games or underground casinos
The location of the operator doesn't change your tax obligation. You're a U.S. taxpayer, and U.S. tax law applies to your worldwide income.
The Risks of Non-Compliance
🔴 Risk 1: Bank Account Scrutiny
When you withdraw from offshore sites, the money hits your bank account. Banks report large or unusual transactions. If you deposit $20,000 in "miscellaneous income" with no paper trail, that's a red flag.
🔴 Risk 2: Crypto Isn't Anonymous
Most offshore sites now use Bitcoin or other crypto. The IRS has significantly improved its blockchain tracking. They've successfully traced and prosecuted crypto tax evaders. Don't assume crypto provides cover.
🔴 Risk 3: Audits and Interest
If you're audited and unreported gambling income is discovered, you'll owe back taxes plus interest plus penalties. The "failure to file" penalty is 5% per month, up to 25% of unpaid taxes.
🔴 Risk 4: Criminal Prosecution
Tax evasion is a federal crime. While the IRS typically pursues civil penalties first, willful underreporting of significant income can lead to criminal charges. The threshold isn't as high as you might think.
Legal vs. Offshore: Tax Comparison
| Factor | Legal Ohio Books | Offshore Books |
|---|---|---|
| Winnings Taxable? | Yes | Yes |
| W-2G Issued? | Yes (when required) | No |
| Win/Loss Statement? | Yes (on request) | No |
| Losses Deductible? | Yes (with records) | Yes (if you can prove them) |
| Audit Trail? | Clear and documented | You must create it |
| Consumer Protection? | OCCC regulated | None |
Here's the irony: betting legally actually makes tax compliance easier. You get W-2Gs, win/loss statements, and a clear paper trail. Betting offshore creates documentation headaches even if you want to comply.
How to Report Offshore Winnings (If You Must)
If you've bet offshore and need to report winnings, here's the process:
- Track everything. Keep your own records of deposits, withdrawals, and individual bet outcomes. Screenshots of your account history are essential.
- Calculate net winnings. Add up all winning sessions and all losing sessions. Report net winnings as "Other Income" on Schedule 1 of Form 1040.
- If you itemize: Report losses on Schedule A, up to the amount of your winnings. You cannot deduct more than you won.
- Document conversion rates. If you used crypto, document the USD value at the time of each deposit and withdrawal. Use a consistent methodology.
- Consider a tax professional. Complex gambling income, especially involving crypto, benefits from professional preparation.
Legal sportsbooks only issue W-2G forms for wins of $600+ at 300:1 or greater odds. Most of your legal wins aren't reported either—but they're still taxable. The same logic applies to offshore wins.
Why Legal Books Are Simpler
Beyond the legal risks, offshore betting creates practical problems:
No Annual Statements
FanDuel, DraftKings, and other Ohio-licensed books provide annual win/loss statements. One download and you have everything you need for taxes. Offshore sites don't offer this.
Withdrawal Complications
Getting money out of offshore accounts often requires crypto conversions, multiple steps, and days of waiting. Legal books offer instant PayPal withdrawals.
No Recourse for Disputes
If an offshore site refuses to pay a winning bet, who do you complain to? There's no regulator, no consumer protection. With Ohio-licensed books, the OCCC enforces compliance.
The Case for Going Legal
With 14 legal sportsbooks in Ohio offering competitive odds, promotions, and bonuses, there's little reason to bet offshore anymore. Legal books offer:
- Better consumer protection
- Easier tax compliance
- Instant deposits and fast withdrawals
- Promotional offers and bonus bets
- Customer service you can actually reach
The "edge" of offshore betting—avoiding taxes—isn't actually an edge. It's a risk. And the other supposed advantages (higher limits, more markets) are increasingly matched by legal operators.
Bet legally, report accurately, keep records. It's simpler, safer, and ultimately the same tax bill. The IRS doesn't care where the sportsbook is located—they care that you report your income.
Understand the 2026 Tax Changes
New rules are making gambling taxes more complicated for everyone.
Read: 2026 Tax Cliff →