When you receive cashback from a credit card for purchases made at an online casino, these amounts may or may not be taxable depending on how they are redeemed. The IRS and Tax Court in Konstantin Anikeev v. Commissioner have held that when credit card rewards are received in connection with the purchase of cash equivalents like money orders, these transactions result in taxable income. Depositing money into a casino balance is identical to depositing money into a bank account as you are technically "purchasing cash" at a discounted rate.

Receiving cashback in and of itself is not a taxable event, but if you redeem as statement credit you have made an attempt to reduce your basis in cash. As it is impossible to have a negative basis, the full value of the statement credit is an accession to wealth and must be reported as income in the year it was received.

The IRS has issued guidance in Announcement 2002-18 that redeeming cashback as points like frequent flyer miles or hotel stays are generally not taxable. Due to the difficulty of tracking and valuing such rewards, the IRS has stated it will not pursue enforcement. If you later decide to convert your points into a cash equivalent like statement credit, this will revoke the tax-free status.