Do Nonresidents Pay Taxes on Gambling Winnings in the U.S.?

Do Nonresidents Pay Taxes on Gambling Winnings in the U.S.?

Whether you’re visiting Las Vegas for the first time, studying in the U.S. on a J-1 or F-1 visa, or betting on sports while on vacation — one question often comes up:
Do nonresidents have to pay taxes on gambling winnings in the United States?

The short answer is yes — but with the right tax treaty, you might be able to reduce or even eliminate that tax.

In this guide, J1 Summer Tax Back explains how U.S. gambling taxes work for nonresidents, what treaties can help you save money, and how to reclaim any tax withheld on your winnings.

🎰 Do Foreigners Pay Taxes on U.S. Lottery or Casino Winnings?

Yes. If you’re a nonresident alien, your gambling income in the U.S. — including lottery, casino, sports betting, or raffles — is generally subject to a 30% federal withholding tax on the total winnings.

For example:

  • A Canadian tourist wins $10,000 at a Las Vegas slot machine → $3,000 is automatically withheld for the IRS.

  • A UK student on an F-1 visa wins $2,000 through a sports betting app → $600 is withheld.

This rule applies to all gambling income, whether it’s from casinos, online betting, or state lotteries like Powerball and Mega Millions.

💵 Which Winnings Are Taxable for Nonresidents?

Nearly all types of U.S. gambling income are taxable for nonresidents, including:

  • Lottery or raffle prizes

  • Casino wins (slots, blackjack, poker, roulette, etc.)

  • Sports bets (in-person or online)

  • Horse racing or fantasy sports

  • Sweepstakes or game show prizes

🧾 State taxes may also apply — depending on where you win.
Some states, like Texas or Florida, do not have income tax, while others (like New York or California) may withhold an extra 8–10%.

🧮 How Is U.S. Lottery or Casino Tax Calculated?

If you win $1,000,000 as a nonresident alien:

  • $300,000 (30%) is withheld for federal tax,

  • Plus, potential state tax, depending on where you won.

Your net payout = $700,000 (or less).

However, if your home country has a U.S. tax treaty, you may qualify for a reduced rate — or even full exemption — on your gambling income.

🌍 Tax Treaty Benefits on U.S. Gambling Winnings

Some countries have treaties with the U.S. that lower or remove the 30% federal tax on gambling income.

Residents of the following countries do not pay U.S. federal tax on gambling winnings:

Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.

Residents of Malta are taxed at a reduced 10% rate.

To qualify, you must:

  1. Be a resident of a treaty country,

  2. Provide Form W-8BEN to the payer at the time of the win,

  3. File Form 1040-NR if you wish to reclaim any overpaid tax.

💰 Case Study: Claiming a Refund

Example – UK Resident

David, from the UK, wins $12,000 at a Las Vegas casino.
The casino withholds 30% ($3,600) for federal tax.

Since the U.K.–U.S. tax treaty exempts gambling income from tax:

  • David files Form 1040-NR, claims the treaty benefit,

  • Submits his Form 1042-S and proof of withholding,

  • And receives a full refund of $3,600 within a few months.

✅ Tip: Without submitting Form W-8BEN at the time of the win, your refund claim may be delayed or denied.

❓Who Is Exempt from Paying Gambling Taxes?

Only individuals from countries with an active U.S. tax treaty that covers gambling income.
There is no automatic exemption for students or J-1 visa holders unless their home country treaty applies.

🏇 “When Does the Gambling Treaty Expire in Texas?”

This is a common Google search — but slightly misleading.
There’s no “Texas treaty” because tax treaties are signed at the federal level, not by states.

Texas has no state income tax, but the federal 30% withholding still applies — unless your country’s treaty provides relief.

So yes, if your country has an exempt treaty, you can potentially walk away tax-free in Texas — but only if you file the right forms.

🧾 Reporting Gambling Income to the IRS

If you earned gambling income as a nonresident in the U.S., you must:

  1. File Form 1040-NR by April 15 (or the next business day),

  2. Include Form 1042-S (issued by the casino, lottery, or betting platform),

  3. If claiming a treaty exemption, attach Form 8833.

🧠 How J1 Summer Tax Back Can Help

Filing taxes as a nonresident can feel confusing — especially when gambling winnings and treaties are involved.
That’s where J1 Summer Tax Back helps.

We specialize in:

✅ Determining your tax residency status,
✅ Checking if your country has a treaty,
✅ Preparing your Form 1040-NR correctly,
✅ Helping you reclaim any overpaid gambling tax.

Whether you hit the jackpot in Vegas or won big online — we’ll make sure you keep the maximum amount you’re legally entitled to.

🎲 Won big in the U.S.? Don’t leave your refund on the table — claim it with J1 Summer Tax Back.