If you’re planning to bet on your favorite team during the 2026 FIFA World Cup, there’s something you should know first. New tax rules could mean paying taxes even when your bets end up losing money. The 2026 FIFA World Cup is around the corner starting this month and is expected to generate about $150 billion in betting.
Millions of people are expected to bet on the tournament for the first time. Better match timings for North American viewers, the new 48-team format, and the growth of legal betting apps have helped increase betting interest.
A Paysafe survey found that 29% of U.S. bettors are first-time gamblers. The same survey found that about 60% of fans worldwide plan to place bets on the World Cup where betting is legal, according to Paysafe cited by Kiplinger report. Experts expect new bettors to affect betting odds because casual fans usually bet on famous teams. Sportsbooks may reduce payouts on popular teams to protect themselves from large losses.
World Cup betting odds change
Teams like Spain and France are expected to get a lot of bets from fans. When many people bet on the same team, the odds become less attractive, meaning bettors risk more money for smaller returns. Casual bettors also tend to bet on high-scoring matches because they are more exciting to watch.
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This can push goal predictions higher than normal and create better value on “under” bets. Betting apps could face slowdowns or outages during the tournament because of heavy traffic. The biggest risks for bettors this year could be new IRS tax rules rather than losing bets.
New IRS tax rules
In previous years, gamblers could generally deduct their losses against their winnings if they qualified and itemized deductions. Starting with the 2026 tax year, gambling losses can only be deducted up to 90% of winnings.
What is Phantom income?
Tax experts call the result “phantom income” because people may owe tax even when they lose money overall. Kiplinger gave an example of a bettor who wins $3,000 and later loses $4,000. Under the new rule, only $2,700 of the losses can be deducted because that equals 90% of the winnings.
The remaining $300 is treated as taxable income by the IRS. This means the bettor lost $1,000 overall but could still owe taxes. That taxable income would be taxed at ordinary income tax rates ranging from 10% to 37%. Roughly 90% of Americans take the standard deduction, Kiplinger notes. People who take the standard deduction generally cannot deduct gambling losses.
IRS reporting rules
In the example above, they may have to report the entire $3,000 in winnings while absorbing the $4,000 loss. Many first-time bettors wrongly believe they do not owe taxes if they do not receive a tax form. The IRS recently increased the automatic sportsbook reporting threshold from $600 to $2,000, provided winnings are at least 300 times the wage, as per Kiplinger. Even if no form is issued, federal law still requires gamblers to report all gambling income.
Kiplinger advises bettors to keep a detailed record of every wager. Bettors should save information such as dates, betting slips, stake amounts, winnings and losses. The IRS calculates wins and losses by individual betting sessions rather than by the final account balance. Bettors are advised to download their betting history regularly and not rely on apps to store records forever.
State betting tax laws
State tax rules can differ from federal rules. Some states, including Connecticut and Ohio, may require reporting at the $600 level. States such as Tennessee do not have state income tax on gambling winnings. Online gambling remains illegal in some states, including California and Alabama. Kiplinger advises bettors to check local laws before placing any wagers. Betting rules often depend on where a wager is physically placed and processed.
New Jersey allows extensive sports betting and taxes gambling winnings. Washington state does not tax gambling winnings but does not allow mobile sports betting. In Washington, sports betting can only take place in person at Tribal casinos. Americans traveling to Canada or Mexico for World Cup matches may find that U.S. betting apps stop working across the border.
Sportsbooks use geolocation technology to block betting outside approved locations. Travelers who want to bet abroad must follow the gambling laws of the country they are visiting. Any gambling winnings earned abroad must still be reported to the IRS by U.S. taxpayers, notes Kiplinger. To avoid problems bettors can keep detailed records, understand local laws and stay aware of the new tax rules.
