All gambling winnings, whether they are the result of legalized gambling (casino, racetrack, etc.) or illegal gambling are subject to the New Jersey Gross Income Tax. Effective January 1, 2009, New Jersey Lottery winnings, which had previously been exempt, are taxable for prize amounts exceeding $10,000. Taxpayers may deduct all types of gambling losses, including those from playing the New Jersey Lottery, from their total gambling winnings during the tax period not to exceed the total of the winnings because gambling is a “net” category of income. Taxpayers may be required to substantiate gambling losses used to offset winnings reported on their New Jersey Gross Income Tax Return by providing evidence such as losing race track pari-mutuel tickets, losing lottery tickets, a daily log or journal of wins and losses, canceled checks, notes, etc. Nonresidents' gambling winnings from New Jersey sources are subject to the New Jersey Gross Income Tax in the same manner as the winnings of residents. Payors of certain New Jersey gambling winnings, including the New Jersey Lottery, are required to withhold New Jersey gross income tax at the rate of 3% on payments made both to New Jersey residents and nonresidents.