Tax on Sweeps Casino Winnings? Will the State Take Your Winnings?

Sweepstakes casinos generally avoid providing specific tax information, often advising you to refer to appropriate advisors on tax matters. I recommend following that advice, as taxes vary widely from state to state.

On the bright side, I found some generous bonuses on these sites, like Stake.us’s 55 Stake Cash + 260K Gold Coins + 5% Rakeback when you sign up with promo code DIMERS. In this guide, I’ll explain how taxes work on sweepstakes casinos.

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Are sweepstakes casino winnings taxable?

You’re generally liable to pay tax on prizes you redeem from a sweepstakes casino once they add up to a certain amount, which varies state by state. Due to the unique model of sweepstakes casinos, prizes are not taxed the same way as conventional casino prizes, and you may need to consult with a tax professional in your state for personalized advice.

This is not financial or legal advice and there might be case-by-case nuances. However, sweepstakes casino prizes are generally not regarded as gambling winnings, so most tax professionals advocate filing your redeemed prizes on a 1099-MISC form as “other income,” not gambling winnings.

It helps to know how sweepstakes casinos work to understand why that is the case. Unlike conventional casinos, you can’t fund your sweepstakes casino balance with real money, as you play with free virtual currency, usually Gold Coins (GC) and Sweepstakes Coins (SC). Generally, you don’t have to make an initial purchase to play, but you can buy Gold Coin bundles to replenish your balance.

Virtual currencies in practice

Buying Gold Coin bundles isn’t the same as funding a conventional casino account with real money, as you’re essentially purchasing valueless coins to play casino-style games for fun. Oftentimes, you get bonuses in Sweepstakes Coins when you buy Gold Coin bundles, allowing you to play promotional sweepstakes on the social casino.

Playing through your Sweepstakes Coins makes them redeemable for real prizes, but may still not make them taxable; remember, your Sweepstakes Coins are valueless currencies and are not real money or equivalent. You often only owe taxes when you decide to redeem the coins for real money, transforming the valueless coins into legitimate sweepstakes winnings that the IRS taxes.

Ultimately, the advice above is not a substitute for professional advice from a licensed attorney or tax professional. I recommend talking to a finance lawyer or tax expert licensed in your state before determining how to handle taxes for your sweepstakes prizes.

Pros and cons of sweepstakes casino winnings

You should always talk to a tax professional in your state before reporting your sweepstakes casino prizes for appropriate advice. Nevertheless, here are some pros and cons to expect when you play at social casinos and redeem your Sweepstakes Coins (SC) for real prizes:

• SC are redeemable for real prizes
• GC and SC have no monetary value
• Sweepstakes prizes are legal in the US

• Complex tax regulations

Best sweepstakes casinos for prize redemption

Most sweepstakes casinos will let you redeem your Sweepstakes Coins for real prizes. However, here’s my top sweeps casino list with friendly prize redemption terms and requirements:

Stake.us – Best sweepstakes casino overall

Stake.us: Pros & Cons

• Highly Diverse Slots
• Huge No Deposit Bonus
• Exclusive Stake Originals Games

• High 3x Playthrough Requirement
• Crypto-Only Payment Methods

Visit Stake.us

Stake.us is one of the biggest sweepstakes casinos in the United States, partly because of how seamlessly Stake Cash redemption works on the site. Redeeming Stake Cash involves getting them from bonuses, completing the 3x playthrough requirement, and verifying your identity to unlock the SC for redemption. However, Stake.us offers no tax advice, referring all users to qualified financial advisors in their states.

Signing up on Stake.us with promo code DIMERS unlocks a generous welcome bonus offer of 55 Stake Cash + 260K Gold Coins + 5% Rakeback that you can get as soon as you sign up and verify your contact information (email and phone number). You can use the virtual currencies from the welcome bonus to play the Stake.us games. I played the popular Sweet Bonanza 1000, Snow Slingers, and Gates of Olympus 1000 and enjoyed every minute of the experience.

WOW Vegas

WOW Vegas: Pros & Cons

• Solid No Deposit Bonus
• Great Bonus Variety
• Lots of Payment Methods

• No Table Games
• Lower Than Average Referral Bonus

Visit Wow Vegas

Prize redemptions at WOW Vegas work similarly to that of Stake.us: you can only redeem Sweepstakes Coins for real prizes after completing predetermined playthrough requirements and meeting a minimum threshold. WOW Vegas’s Terms and Conditions also state in no uncertain terms that users are solely responsible for any applicable taxes, so you may want to keep that in mind when playing here.

WOW Vegas has a welcome bonus of 120,000 WOW Coins + 2 Sweepstakes Coins, which I got immediately after signing up. Thanks to the bonus, I played Auto Roulette and the Joker’s Show slot, and the games worked buttery smooth, as expected. I also found a decent selection of WOW Coin bundles in the WOW shop where you can buy WOW Coin packages with free Sweepstakes Coins bonuses included.

RealPrize

Real Prize: Pros & Cons

• Dedicated iOS and Android App
• Low 45 SC Minimum Redemption Limit
• Great Daily Bonus

• Fairly Small Game Selection
• Limited Coin Packages

Visit Real Prize

When I first signed up on RealPrize, I got 7,500 Gold Coins + 3 SC welcome bonus, instantly allowing me to play Gates of Olympus and Thunder Rage for free on the site. According to RealPrize’s Sweepstakes Rules page, there are minimum thresholds of 45 SC for gift card prize redemption and 100 SC for all other prize redemption methods. You must also complete additional verification to redeem your SC for real prizes, and as with its counterparts, you’re solely responsible for any taxes applicable to your prizes.

Conclusion – Learn how to navigate taxes with sweepstakes casino winnings

If you recently redeemed Sweepstakes Coins for real prizes, I recommend seeing a tax professional in your state to know what taxes you may owe and how to file them correctly.

For the best sweepstakes casinos when it comes to prize redemption, Stake.us, WOW Vegas, and Real Prize are my top recommendations. Not only do they offer top-tier games and an easy prize redemption process, but you also get generous bonuses after registration to try all their casino-style games for free.