What Happen$ in Vegas Goes to Washington

Sunday’s Super Bowl in Las Vegas was a spectacle for the ages. MVP Patrick Mahomes and the Kansas City Chiefs affirmed their dominance in the NFL, coming from behind to win in overtime. It was their second straight Lombardi trophy and their third in five years. About 1,000 celebrities clogged nearby airports with their private jets, including Kansas City’s #1 superfan, Taylor Swift. Thousands more fans descended on the stadium and the city to eat, drink, and be merry.

The IRS is always a big winner on Super Bowl Sunday. The Las Vegas Convention and Visitors Authority expects it to generate $600 million in economic impact for the city. Much of that $600 million will eventually find its way to Washington in the form of taxes on income from seat sales (the most expensive luxury boxes went for $2.5 million), lodging, food, and beverage revenue, and gambling winnings. (Most of the ballers flying in for Super Bowl Sunday would rather die than be seen sitting at a nickel slot machine.)

But hosting a Super Bowl in Vegas marks a turning point for the NFL, along with a broader transition that works in the IRS’s favor, too.

The NFL has always had an uneasy relationship with gambling. League officials aren’t stupid, of course. They’ve always known it happens, both among friends and through goons with names like “Louie the Nose” and “Frankie Bats” hanging out in sketchy bars. They’ve even facilitated it in ways both big and small – for example, by requiring teams to report on players’ injuries, which helps oddsmakers set lines. But they’ve always worked to avoid betting scandals that could destroy fan confidence in the integrity of the game. And that included blackballing Las Vegas simply because Nevada was the only state with legal sports books.

In 2018, though, the Supreme Court struck down a 1992 law that effectively banned sports betting in most states. Since then, sports books have exploded, especially online. Now, all you have to do is download an app, and you’ll have a casino in your pocket wherever you go. And you’ll be amazed at the variety of “proposition bets” you could make on the game. Are you a coin toss fan? You could bet heads or tails, or Chiefs or 49ers. Are you a Gatorade fan? You could bet on the color of the Gatorade to be poured on the winning coach after the game. (Purple was the favorite at +225, with blue running a close second at +275, and “no bath” a longshot at +2000.) This year, there were even prop bets on how many times Taylor Swift would appear on the broadcast and whether she would join Usher to sing “Shake it Off” at halftime.

The bottom line here is that much of the Super Bowl betting that used to go through bookies (where it got spent on pinkie rings) has moved to legal sports books (where it gets taxed). Today’s legal sports books report your winnings to the IRS. Then, they report their own income, too. And that means the IRS wins no matter which team scores the most points.

Once those winnings hit your tax return, you’ll discover another IRS edge. Gambling winnings are taxable, of course. But losses are deductible only up to the amount of winnings. In other words, the IRS shares your gain when you win but not your pain when you lose.

Today’s story is just another example of how taxes affect everything. Sadly, we can’t help your favorite team win the big game. But if you call us to stop wasting money on taxes you don’t need to pay, we’ll help pay for your seat in the stadium!