A Casino Win
The IRS hates casino win/loss statements for two main reasons – one legal and the other practical.
First of all, the IRS has the proper legal authority to disallow the usage of most casino win/loss statements. The Courts and the IRS have interpreted Section 165(d) of the Internal Revenue Code in such a way that gambling activities cannot be reported in a summary fashion. Instead the IRS prefers, yes insists, that gamblers keep a gambling diary (See Revenue Procedure 77-29) and report their activity by “gambling session” (See IRS Chief Counsel Advice Memorandum 2008-011 for more information).
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For example, if a gambler has a $10,000 winning gambling session followed by a losing gambling session of $9,900, the gambler is not allowed to merely report the difference of $100. Instead, the gambler must report the $10,000 as other income, and if the gambler itemizes his deductions, then the loss of $9,900 is included as an other miscellaneous deduction not subject to the two percent limitation.
Playing casino games on the off chance that one might win is the reason why they keep on trying to bring the house down. But nobody wants bad news. Bear in mind that online casino and poker games are prohibited in Australia. Therefore, this is solely an informative content and no casino/poker offers can be found on this website.
The take away – IRC Section 165(d) is focused on “transactions” and not “totals.”
The second reason is indeed more practical. How can the IRS verify that the amounts reported in a casino win/loss statement? Or more likely, how can the gambler during an audit prove the amounts stated in the casino win/loss statements? Not very easily.
It is important to understand the source of the amounts used on casino win/loss statements. For slot machine players, the amounts are recorded when a gambler uses a Player’s Card. For table games such as poker and black jack, the amounts are frequently estimated by a “pit boss” while observing the gambler on the casino floor.
For slot machine players these methods, naturally lead to three common questions:
- Can the gambler prove that he used the Player’s Card every time he gambled?
- Can the gambler prove that he only played one slot machine at a time?
- Can the gambler prove that he was the only one that used the Player’s Card?
For question #1, it is difficult to convince an IRS auditor or a judge that someone not able to keep proper records in the first place was able to remember to use their Player’s Card every time they gambled.
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Question #2 is a fair question. It is common technique for slot machine players to simultaneously play adjacent machines. Unfortunately, it is not possible to insert a Player’s Card into more than one machine at a time.
Regarding question #3, it is important to note that casinos strongly discourage gamblers from sharing their Player’s Card – but it is not uncommon or impossible. The IRS faced a similar situation in the case of Pan v. Commissioner of Internal Revenue, T.C. Memo. 2011-40, (U.S. Tax Ct. 2011). For the tax year in question, the casino reported several Form W-2G’s in Mr. Pan’s name to the IRS. During the audit, the IRS included these additional amounts in Mr. Pan’s income. Eventually, Mr. Pan was able to provide his passport to the IRS and demonstrate to their satisfaction that he was indeed out of the country when some of the W-2G’s were generated. But the question remains. If, if someone is able to “forge” another person’s identity when they receive a hand-paid jackpot, how hard is it to “borrow” another gambler’s Player’s Card?
If that was not reason enough, almost all the casino win/loss statements have some type of “disclaimer” language discouraging their use as reliable accounting records.
For these reasons and more, it is not surprising that the IRS HATES casino win/loss statements.
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The thrills of not knowing what’s going to happen is where gamblers find the adrenaline. Playing casino games on the off chance that one might win is the reason why they keep on trying to bring the house down. But nobody wants bad news.
Bear in mind that online casino and poker games are prohibited in Australia. Therefore, this is solely an informative content and no casino/poker offers can be found on this website.
So, which casino games have the best winning rates then?
Casino games
First things first: how good are you at losing? How much time has to pass in order for you to get back on the track and give it a go again? Since there’s no way of predicting the results of a game of chance, you are left with hoping that, on the next round, you’ll win the day.
Of course, believing in gambling superstitions may be of help too, but what if we were to tell you that some casino games have really high rates of winning?
Blackjack
Playing Blackjack in a casino means that you don’t have a group of poker gurus to stand up against, you just have to face the music and hope for great results. The dealer is the only one to keep in view, and the house is not much of an enemy, to say so.
It only takes 1% (house edge), making Blackjack the game with the best chances of winning. Your only concern is to choose a number that beats the dealer’s number, while being aware that it won’t go over 21.
Craps
With a nearly 50-50 odds of winning, the dice game is supposed to be quite easy to soak up, even by the rookies. Hundreds of different types of bets and the fast pace can seem a little confusing.
Slightly intimidating at first, the Craps table gives you the opportunity to sail close to the wind. The house edge is dancing around 1,4%.
Roulette
You can’t enter a casino and not try out the Roulette. One lucky number can get you the moon. You have a 50-50% chance to walk out on the red carpet. It’s not easy to foresee on which colour will the ball land on. Trusting your instinct is the only way to handle this.
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However, beware of the extra green 0 and 00 positions that can be found on all American roulette wheels. Here, the house makes its demands (5,6%). It’s safer to play just one number (36 to 1).
Casino games that can give you a hard time
The Wheel of Fortune
If you want to get your hands on some winnings as fast as possible, then you ought to step aside from the Wheel of Fortune and the slot machines. The house edge is exceeds 10%. Of course, where there’s a will, there’s a way, but be rational and don’t count on good odds too much with these particular casino games. You are walking on eggs here.
Slots
In any case, the more money you play at slots, the merrier. Although, penny slots do have the lowest odds. The mechanism is very simple: slot machines are programmed in a way that they’ll make payouts in form of winnings of around 82 and 98% of all the wagers put in the machine by players. However, this doesn’t mean that you’ll win that amount. It’s a matter of luck, nonetheless.
Poker
What Is A Casino Win Loss Statement
If interested in poker, you really have to train your smarts. Gaining the upper hand can be done only by practising a lot: during each game, you have 46 unseen cards. Therefore, you are 4 times more likely to lose than to win the game. The standard odds you can encounter for any 5-card hand are 0.0015% (Royal Flush), 0.14% (Full House), 0.196% (Flush), 4.75% (Two Pair) and 50.1% at High Card only.
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Now, it’s up to you whether you want to take the risk and rely on fate, or you choose to go with the safest alternative. Pick out those casino games that you enjoy playing and if they have the best winning rates, you are in luck. But keep in mind though, “the more you bet, the more you lose”.