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About Casino Tax Problem

Gambling The Federal Tax Problem

The most bewildering topic among gamblers who make a big hit is the tax procedure employed by the Internal Revenue Service in the collection of income taxes on a player's of Online Casino gambling winnings. From a technical and legal standpoint, the IRS regulation states "that a gambler’s total yearly winnings must be included in his income. However, he is permitted to deduct his gambling losses incurred during the same year, but only to the amount of his winnings." That is the law, but since all consistent gamblers who buck adverse odds are losers over the long run, where does that leave the poor sucker who happens to be lucky enough one day to win $1,000 or more in a Las Vegas Keno game or a state illinois lottery or to hit a $2 daily double ticket for $600 or more?

Record Keeping Yearly of Bet

To begin with, few gamblers (and none that I know of) keep a record of every bet they make during the year. So even assuming that in early December in any given year, a Craps shooter in Las Vegas gets lucky and manages to get a hot hand at the dice Cards table and wins $1,000 or more, who is to say whether this puts him in the winner's circle for the year? To further complicate matters, no legal casino, racetrack or legal gambling operation keeps records of an individual's gambling transactions-especially those on a cash basis. Therefore, the matter of what to report is up to a gambler's conscience. Sure, there are many cases where gamblers report winnings of $25,000 or more made at a racetrack or at a gambling casino, but many of these individuals are racket guys who list their alleged winnings as earnings rather than reveal illegitimate sources of revenue.

Internal Revenue Service

At racetracks, any $2 ticket whose payoff is $600 or more means that the winner of the Casino game must fill out tax forms at the track which in turn will deliver them to the Internal Revenue Service. The same holds true for winners of state lotteries. From a practical standpoint there is only one game played in Nevada today where the Internal Revenue Service requires that a report be made of any sizable wins. This is Keno. Some of the Keno lounges, in fact, post a detailed schedule citing the size of the winning tickets that the casino must report to the IRS. The schedule is as follows:
The IRS policy creates for winning Keno, lottery and horse players, etc., as many questions as it does answers. For example, a horse player buys several $2 daily double or exacta tickets and gets lucky and wins $2,000. In accordance with racetrack policy, a report of the winnings is made to the Internal Revenue Service, whom we will assume expects the $2,000 winnings to be added to the taxpayer's gross income for that year. The trouble is that during the same year the player lost more than $2,000 at Las Vegas and at various racetracks. However, since no records were kept of these betting transactions, the player has no way of proving this except by his own statement-which the IRS will not accept unless it is documented. At the racetrack such documentation is possible by evidence of losing bets. The player can produce losing tickets on horse races, Keno and lotteries, canceled checks to casinos, etc.