As the 2024-2025 football season kicks off, millions of Americans are gearing up for another thrilling year of NFL and college football. With sports betting becoming more accessible through online platforms, the number of people placing bets has skyrocketed. In fact, nearly 68 million Americans placed wagers on last year’s Super Bowl alone, representing a 35% increase from the previous year. But with this surge in sports betting, the IRS Criminal Investigation (IRS-CI) unit is also ramping up its efforts to crack down on illegal gambling activities—and bettors should take note.
Sports betting is legal in many parts of the U.S., but there are strict regulations governing how it should be conducted. Unfortunately, illegal gambling operations are still thriving, and their impact is significant. According to the IRS, the illegal sports betting market in the U.S. generates over $700 million in unreported revenue annually. Over the past four years, IRS-CI has launched 151 investigations into illegal gambling, uncovering more than $178 million in illicit funds and leading to over 70 sentencings, many of which resulted in substantial prison time.
One of the more high-profile cases involved Shohei Ohtani’s former interpreter, Ippei Mizuhara, who was caught embezzling nearly $17 million from Ohtani’s bank account to cover his gambling debts. Mizuhara had gained access to Ohtani’s account by posing as the baseball player, exploiting the system to divert funds without Ohtani’s knowledge. This case highlights just how pervasive illegal gambling can be, even involving high-profile sports figures. The IRS is making it clear that no one is above the law when it comes to reporting gambling earnings and engaging in legal betting practices.
So, what does this mean for the average bettor? First and foremost, any winnings from sports betting—whether placed online or in person—must be reported on your annual tax return. Many people mistakenly believe that small, casual bets don’t count, but the IRS requires all gambling income to be reported, regardless of the amount. Additionally, bettors should keep thorough records of their bets, including winnings and losses, to avoid any discrepancies when it comes time to file taxes.
If you’re new to sports betting or uncertain about how to comply with the law, now is the time to seek professional advice. Tax professionals can offer guidance on reporting gambling income, and the IRS website provides helpful resources on how to stay compliant. As sports betting continues to grow in popularity, it’s critical for bettors to stay informed and avoid any legal pitfalls. The IRS has shown that it’s serious about cracking down on illegal gambling, and ignorance of the law won’t protect anyone from the consequences.
