Sweeps casinos are growing in popularity, especially in California. With no legal online casino gambling, Golden State residents can use these platforms as a fun, legal alternative.
Sweeps casinos have a similar feel to casino games. You can play games that resemble slot machines, card and dice games, and more. But unlike online casinos, sweeps casinos do not require you to use any real money. They are free to play. You can redeem virtual currency – commonly referred to as sweeps coins – for cash or prizes.
And while it’s a great form of entertainment (and a way to satisfy the itch until California legalizes online casinos), it’s important to know the ins and outs of how to report your winnings and pay taxes on sweeps casino rewards.
PlayCA has conducted extensive research and spoken to an H&R Block tax professional to provide accurate information about sweeps casino taxes. Tax laws can be complex and vary by individual circumstances. Please consult a tax professional for personalized guidance.
Are Sweeps Casinos Winnings Taxable?
In short: Yes. Any winnings you take home from playing sweeps casino games are taxable.
Your winnings from a sweeps casino may vary. You could win a tangible prize, a gift card, or even cash. It depends on the operator and what you choose to redeem your sweeps coins for. But at the end of the day, the value of your winnings, regardless of what exactly you chose, is treated as taxable income.
Much like gambling, sweeps casino winnings are taxed federally. They are also taxed at the state level for states with state income taxes, including California.
It’s important to note that even though sweeps casinos are not traditional casinos (and therefore don’t fall under the typical gambling regulations and rules) the IRS still sees them as the same when it comes to taxes. Both fall under their definition of contributions to your general income.
It’s also key to know that the virtual currency you use to play – gold coins and sweeps coins – are valueless. Those are not taxable.
Federal Taxation On Winnings From Sweeps Casinos
The IRS views any winnings from playing sweeps casinos as a taxable income, just as it does if you win any money from a brick-and-mortar casino here in California.
In turn, there are a number of forms you should be aware of:
- Form 1099-MISC: You could receive a Form 1099-MISC (miscellaneous income) from a sweeps operator if you win $600 or more. Essentially, this indicates to both you and the IRS the amount you won. This also applies to non-cash prizes, such as physical things and gift cards.
- Form W-2G: Sweeps operators can also give you a Form W-2G for certain gambling winnings if your winnings go above the reporting threshold. The IRS says this form must be filled out if you have “$600 or more in gambling winnings and the payout is at least 300 times the amount of the wager, or any other gambling winnings subject to federal income tax withholding.” You will also need to fill out this form if you hit certain thresholds for slot machines, bingo, or keno within California.
A look at the different federal income tax brackets for 2025. Screenshot taken from taxfoundation.org.
Since the IRS views sweeps casino winnings as contributions to your overall income for the year, your winnings could potentially influence where you sit on the tax bracket. We included a screenshot of the 2025 federal income tax brackets for single filers, married couples filing jointly, and also for heads of households.
How to Report Your Sweeps Casino Winnings on your Federal Income Tax Return
When it comes to filing your taxes, you will need to file your sweeps casino winnings on line 8B of form 1040.
It’s important to also deduct the losses and purchases of gold coins, sweeps coins, or any other virtual currency sweeps casinos utilize.
In order to claim any losses and costs associated with sweeps casinos play, you must itemize your deductions. If your losses or costs are less than the standard deduction, you should just claim the standard deduction.
If your losses or costs from sweeps casinos are more than the standard deduction, you should itemize your deductions using form Schedule A.
Itemizing your deductions using form Schedule A is a fairly new development, and it’s important to remember. The Tax Cuts & Jobs Act of 2017 got rid of the option to add miscellaneous deductions to your 1040.
State Taxation On Winnings From Sweeps Casinos
Just like the IRS, the California Franchise Tax Board tabs your winnings from sweeps casinos as taxable income.
That means your winnings could potentially impact where you land within California’s state income tax brackets. We’ve included a screenshot to help you see where you sit.
How to Report Your Sweepstakes Casino Winnings On California State Income Tax Returns
So, when it comes to filing your taxes this year, you will need to report any sweeps casino winnings on your California Form 540. They should be included as part of your total income, and thus taxed at the typical rate within California.
It’s important to note that even if your sweeps casino operator doesn’t give you a 1099-MISC or a W-2G, you still need to report the full amount of your winnings on your tax return.
And, unlike at the federal level, California does not let players classify any losses incurred by sweeps casino players as taxable deductions. So, don’t subtract your losses from your total taxable income when filling out your state taxes.
Key Differences In State Tax Codes
Not every state is the same when it comes to how you sweeps casino winnings impact your taxes.
No State Income Tax States
In total, there are nine states that don’t have state income tax:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Since these states do not have a state income tax, any winnings you’d collect from sweeps casinos aren’t subject to taxes at the state level. You don’t need to report your winnings to the state, but you still have to at the federal level.
Flat State Income Tax States
There are 15 states that have a flat state income tax. This means that no matter how much income you earn in these states, your tax rate is the same.
- Arizona
- Colorado
- Georgia
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Michigan
- Mississippi
- North Carolina
- Pennsylvania
- Utah
- Washington
In these states, any winnings from sweeps casinos are considered taxable income. However, you don’t need to worry about those winnings putting you into a higher tax bracket.
You still need to report your winnings at the state level, but your tax rate doesn’t change based on the amount of your total income for the year.
High-Tax States
California takes the crown as the state with the highest state income tax rate. The highest top marginal individual income tax rate within the Golden State is 13.3%. We included a look at the 2025 California state income tax bracket above, which gives a more detailed look.
However, California isn’t the only state with a high state income tax rate. Hawaii and New York follow close behind with their highest tax rates at 11% and 10.9%, respectively. New Jersey and Washington D.C. also boast a highest tax rate above 10%, and Minnesota and Oregon both sit at 9.9%.
As mentioned with California specifically (but also for the other states with a state income tax), you must report your sweeps casino winnings as part of your income for the year.
Tips For Reporting Winnings From Sweeps Casinos
It can be difficult to try and track down your winnings when you file your taxes, especially if your operator didn’t give you any forms. Luckily, we have a few tips for you:
- Keep a running record of gaming history for the year. This includes receipts for payouts, deposits, prize winnings, etc.
- Double-check the sweeps casinos you use. Many will keep your transaction history on file.
- Read through sweeps casinos’ terms and conditions. The operators may mention that they report winnings through specific forms, such as 1099-MISC or W2-G. It’s a key indicator of the platform’s credibility and safety.
- Work with a tax professional. If you frequently play sweeps casino games, it’s not a bad idea to consult with an expert if you have any reservations about how to report your winnings and losses.
Reminders For Paying Taxes On Sweeps Casino Winnings In California
Don’t assume you’re all set when it comes time to file your taxes. Any winnings you take home from playing sweeps casinos counts toward your total income for the year, which means in California, it may affect where you fall in the state tax brackets. You should always comply with tax obligations, both at the state and federal level. We recommend keeping track of your activity on a year-round basis, so things are easier for you when you go to include your winnings from sweeps casinos in California in your taxes this year.
- Related Article: How to Pay Taxes on Gambling Winnings in California
Sweepstakes Casino Taxes FAQs
Yes. All gaming winnings are considered taxable income in the state of California.
Yes. California residents need to report the fair market value of non-cash prizes won at sweeps casinos.
Since California classifies sweeps casino winnings as taxable income, those winnings will count toward your total income for the year.
It is your responsibility to report your sweeps casino winnings on both your federal and state income tax forms. In turn, it’s crucial to keep a record of your gaming winnings for the year.