"Gambling Winnings
Income tax is withheld at a flat rate from certain kinds of gambling winnings.
Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding.
Any sweepstakes, wagering pool, or lottery.
Any other wager if the proceeds are at least 300 times the amount of the bet.
It does not matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value."
Publication 505, Tax Withholding and Estimated Tax