TO: Indian Gaming Association Member Tribes FROM: David Z. Bean, Chairman Jason Giles, Executive Director Danielle Her Many Horses, General Counsel RE: IRS Issues Draft Instructions for Filing W-2G and Form 5754 Date: December 29, 2025

The Internal Revenue Service (“IRS”) has issued an early release draft of the 2026 filing instructions for tax forms W-2 G and 5754.  To provide background on these forms, individuals or entities reporting gambling winnings or any federal income tax withheld on such winnings are required to do so using Form W-2 G.  Likewise, Form 5754 must be prepared when the individual receiving the gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of individuals sharing the winnings. While it does not appear that IRS has made significant revisions to the forms’ instructions, the IRS has updated them to account for sports wagering winnings.  

As of January 2026, Form W-2 G shall include sports wagering in its list of the types of gambling activities that warrant specific reporting requirements.  The form instructs filing parties to file Form W-2 G for every person to whom they pay gambling winnings meeting or exceeding the applicable reporting threshold if the winnings are 300 times the amount of the wager or more. Federal income tax must be withheld from the winnings if the winnings minus the wager (the proceeds) exceed $5,000.00 and the winnings are at least 300 times the wager. The form then instructs individuals to withhold 24% of the proceeds. The form also clarifies that “identical wager” winnings are to be added together for purposes of reporting and withholding requirements.  These instructions are quite similar to those for Horse Racing, Dog Racing, Jai Alai, and Other Wagering Transactions Not Discussed Later, but it is a helpful sign for the future of sports wagering that, assuming this draft is finalized, it shall be explicitly accounted for by the IRS. 

In addition to these changes, the IRS also made minor adjustments to the minimum threshold requirements for reporting certain payments and backup withholding on certain information returns by increasing the minimum threshold to $2,000.00.   The early release draft of the updated filing instructions is available on the IRS website at https://www.irs.gov/pub/irs-dft/iw2g–dft.pdf.  

Please contact Danielle Her Many Horses at dhermanyhorses@indiangaming.org with any questions or concerns regarding this Alert.