IRS Cracks Down on Illegal Sports Gambling as Football Season Looms

As legal sports betting continues to surge in popularity, the Internal Revenue Service’s Criminal Investigation (IRS-CI) unit is intensifying its efforts to crack down on illegal sports gambling.

IRS Criminal Investigation Unit Targets Illegal Sports Betting

With the football season underway, IRS-CI is using the opportunity to remind bettors that it is actively investigating a range of offenses related to illegal gambling and urging taxpayers to take precautions when placing bets. Each fiscal year, the agency launches over 30 investigations into illegal gambling, achieving a 92% conviction rate for those cases that go to court. In the last five fiscal years alone, 96 individuals have been convicted for illegal gambling-related crimes, with prison sentences ranging from five to 33 months.

In a statement released on September 2, IRS-CI Chief Guy Ficco noted that, in recent years, a growing number of online crypto casinos have begun offering sports betting options. He explained that many of these platforms are based offshore and intentionally avoid implementing know-your-customer (KYC) protocols in order to attract anonymous users who may be engaged in illicit activities. Ficco emphasized the importance of gambling safely and legally.

IRS Advises Customers on Sports Betting

The IRS-CI is urging taxpayers to take precautions when engaging in sports betting, particularly as the football season ramps up. In a recent media release, the agency outlined several key recommendations to help individuals avoid legal and financial trouble.

Taxpayers are advised to use only state-licensed gambling platforms that are legal within their jurisdiction. Offshore and cryptocurrency-based gambling sites, which often bypass know-your-customer (KYC) protocols to attract anonymous users, should be avoided due to their potential ties to illicit activity.

IRS-CI also reminds bettors that all gambling winnings must be reported as taxable income. Failure to do so can result in both civil and criminal penalties. Additionally, the agency warns against placing bets on behalf of others or gambling with the intent to conceal the source of funds, which are actions that could potentially implicate individuals in money laundering schemes.

In the media release, IRS-CI advised that individuals with questions about their tax obligations related to gambling income should seek guidance from qualified tax professionals or consult the official IRS website. The agency emphasized that a lack of awareness about tax laws does not absolve individuals of their legal responsibilities.