Whether you’re a tourist trying your luck in Las Vegas, an international student who hit the jackpot, or a foreign national betting on sports in the US, one question looms large: Do nonresidents pay taxes on gambling winnings in the U.S.?
In this post, we’ll walk you through taxes on gambling winnings, how they apply to nonresident aliens, and what treaty benefits (if any) could reduce your liability.
We’ll also break down lottery winnings, casino payouts, and sports betting, plus show you how to report your earnings—and even how to get some of that tax back.
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Do foreigners pay taxes on U.S. lottery winnings?
Yes. If you are a nonresident alien and you win the lottery, hit it big at a casino, or win through sports betting in the U.S., your gambling winnings are subject to U.S. federal tax. In most cases, the IRS withholds 30% of your gross winnings immediately.
For example:
- A Canadian tourist wins $10,000 at a Las Vegas slot machine → $3,000 withheld and sent to the IRS.
- A UK student wins $2,000 on a U.S. sports betting app while studying on an F-1 visa → $600 withheld.
Even lottery winnings are taxed at this flat 30% rate for nonresident aliens. This includes major state-run lotteries like Powerball and Mega Millions.
What types of gambling winnings are subject to taxation?
Nearly all forms of gambling winnings earned by nonresidents in the U.S. are taxable. This includes:
- Lottery prizes (federal and state)
- Casino wins (slots, table games, poker tournaments)
- Sports betting (online or in-person)
- Racetrack or horse racing wins
- Sweepstakes, raffles, and game show prizes
Note: State taxes may also apply depending on where you won. Some states (like Texas and Florida) do not charge state income tax, but others (like New York or California) can withhold up to 8–10% more on top of the federal rate.
What is the tax on lottery winnings?
If you are a nonresident alien, the IRS imposes a flat 30% tax on the total winnings, not just your net profit.
So, if you win $1,000,000 in a U.S. lottery as a nonresident:
- $300,000 is withheld for federal tax
- Additional state tax may also be withheld depending on the state
Some residents of countries with U.S. tax treaties may qualify for reduced withholding rates—or even full exemption (see below).
What are the tax treaty benefits for U.S. nonresident aliens on gambling or lottery winnings?
Several countries have tax treaties with the U.S. that either reduce or eliminate the federal tax on gambling wins. Gambling income of residents (as defined by the treaty) of the following foreign countries is not taxable by the United States:
Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.
Gambling income of residents of Malta is taxed at 10%.
To benefit from a treaty, you must:
- Be a resident of the treaty country
- File Form W-8BEN with the payer at the time of the win
- Later file Form 1040-NR if they are overtaxed. If they are taxed correctly and do not have other reportable income, they do not need to file a tax return.
Can foreign nationals get a tax refund on casino gambling winnings in the U.S.?
Yes—but only if your country has a tax treaty with the US that covers gambling. In this case, the 30% withheld at the time of payout may be refunded after you file a U.S. nonresident tax return.
Case study – UK:
David from the UK wins $12,000 at a Las Vegas casino
- 30% ($3,600) is withheld by the casino
- David files Form 1040-NR and claims UK treaty benefits. Remember, in order to file a U.S. tax return, you will also need U.S. TIN – an ITIN or SSN
- He receives a full refund of the $3,600 approximately 3–6 months later.
Important: Without the correct paperwork (especially Form W-8BEN), you might not qualify for the refund—even if your country has a treaty agreement with the U.S.
Who is exempt from paying taxes on lottery winnings?
Only residents of countries with a U.S. tax treaty covering gambling income are exempt. Even then, you must file the right forms and meet all requirements. There is no general exemption for students or temporary visa holders unless their home country treaty applies.
When does the gambling treaty expire in Texas?
This is a commonly searched question—but a bit misleading. That’s because there is no specific “Texas gambling treaty.” Remember, the U.S. enters into treaties nationwide, not on a state-by-state basis. Texas is simply a no-state-income-tax jurisdiction, which means:
- You won’t pay state tax on your gambling winnings in Texas.
- But federal taxes still apply, unless a treaty reduces them.
So, if you’re gambling in Texas and your country has a treaty with the U.S. that exempts gambling income, you could walk away tax-free – but only if you file correctly!
How to report gambling winnings on your federal tax return
If you’re a nonresident who earns gambling income in the U.S., you’ll need to:
- File Form 1040-NR by the 15 April tax deadline
- Include Form 1042-S that shows any tax withheld
- If applicable, submit Form 8833 to claim treaty benefits
The good news is that Sprintax Returns can help you navigate this process and ensure you’re claiming every benefit you’re entitled to!
What happens if a non-U.S. citizen wins the lottery?
First off – congratulations!
There will be a few key things to remember in this instance:
- A 30% federal withholding applies by default
- State taxes may also be withheld, depending on the state
- If your country has a treaty → you may be able to claim a refund
- If not → you are taxed like any other nonresident
In all cases, you must file a nonresident federal tax return to stay compliant—and potentially get money back.
Winning big in the U.S. can come with a significant tax bill—especially for nonresidents. But that doesn’t mean you can’t get some of it back. With the right guidance and proper filing, you may be eligible for a full or partial refund, depending on your country’s tax treaty.
At Sprintax, we specialize in helping international students, scholars, and nonresidents understand gambling winnings tax, file their returns, and maximize their refunds.
Got lucky in the U.S.? We’ll help make sure you don’t leave your refund at the table while ensuring you remain tax compliant with the IRS.
