Winning money through PrizePicks can be an exhilarating experience, but it’s important to understand the tax implications. The Internal Revenue Service (IRS) requires individuals to report all income, including earnings from fantasy sports platforms like PrizePicks.
Federal Tax Obligations
The IRS treats gambling winnings as taxable income and requires you to report them on your federal return, typically on Form 1040 with Schedule 1. 1Internal Revenue Service. Topic No. 419 Gambling Income and Losses
Your marginal tax rate depends on your overall taxable income and filing status. In 2025, federal marginal rates range from 10% to 37%.
PrizePicks winnings may also be subject to backup withholding if you fail to provide a correct taxpayer identification number (TIN). The backup withholding rate is 24%. To avoid this, ensure your TIN is accurate. 2Internal Revenue Service. Backup Withholding
Tax Forms
Understanding the tax forms associated with PrizePicks winnings is essential for compliance.
W-2G
Form W-2G is issued for certain gambling winnings that meet specific thresholds. For example, for sweepstakes, wagering pools, and lotteries, a payer generally issues Form W-2G when winnings are $600 or more and at least 300 times the wager; different thresholds apply to bingo, keno, slot machines, and poker tournaments. 3Stay Exempt (IRS). Charitable Gaming for Exempt Organizations
If you receive a W-2G, you report the income on your Form 1040 (typically via Schedule 1) even if no tax was withheld.
1099-MISC
Platforms may issue Form 1099-MISC for prizes and awards of $600 or more that aren’t reported on Form W-2G. Box 3 (“Other Income”) is generally used for these amounts. You must report this income even if you do not receive the form. 4Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
1099-K
Form 1099-K reports certain payment card and third‑party network transactions. For the 2025 tax year, third‑party settlement organizations are generally required to issue a 1099‑K only if payments to a payee exceed $20,000 and involve more than 200 transactions. 5Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill; Dollar Limit Reverts to $20,000
Withholding Requirements
Federal law requires payers to withhold income tax on certain gambling winnings; whether withholding applies depends on the type of game and the amount won. Backup withholding of 24% can also apply if you don’t provide a valid TIN or if the IRS notifies the payer that your TIN/name combination is incorrect. 6Internal Revenue Service. Backup Withholding
State-Level Considerations
State tax obligations for PrizePicks winnings vary widely. Some states have no personal income tax, while others tax gambling winnings at their standard income tax rates. Check your state’s rules or consult a tax professional for guidance.
Recordkeeping
Maintain accurate records of your entries, winnings, entry fees, and any forms you receive. Good records help you report correctly and support your return if the IRS asks for documentation.
Penalties for Inaccurate Reporting
The IRS may impose an accuracy‑related penalty of 20% of the underpaid tax for negligence, disregard of rules, or a substantial understatement of income tax. 7Internal Revenue Service. Accuracy-Related Penalty
If you file late, a failure‑to‑file penalty of 5% of unpaid taxes per month (up to 25%) can apply. If you pay late, a failure‑to‑pay penalty of 0.5% per month (up to 25%) can apply; these penalties can apply together, and interest accrues on unpaid amounts. 8Internal Revenue Service. Collection Procedural Questions