Gambling Loss Opinion

[JackieCPA]

I either need an opinion or a fact. I cannot find anything that shows exactly my answer wherever I look.

So I have a client, who won a big contest at a casino. The winnings were reported on 1099-Misc "Other income". 

The ticket for the contest is free if you gamble at their casino. He feels he should be able to deduct his losses from that day on Schedule A because he wouldn't have received a free ticket if he wasn't gambling. It feels like a gray area to me, because the ticket was really free.

Any thoughts?

[ILLMAS]

See IRS p4706 You Won, page 2 example

[Yardley CPA]

If he can substantiate the losses, why wouldn't you reflect them on Schedule A as an itemized deduction?

[Abby Normal]

2 hours ago, Yardley CPA said:

If he can substantiate the losses, why wouldn't you reflect them on Schedule A as an itemized deduction?

Because prize drawings are not gambling. That's why it's not on a W2G.

[grandmabee]

I agree it is a prize not gambling, that is why it is in box 3 other income.  no losses to offset.

[Yardley CPA]

1 hour ago, Abby Normal said:

Because prize drawings are not gambling. That's why it's not on a W2G.

I interpreted it as gambling.  Good to know.  Thank you. 

[NECPA in NEBRASKA]

I had a lady that NEVER won at poker, but won prizes every year. She would fight me and get so mad, because the manager there told her that she could deduct her huge losses against it. I told her to ask him to prepare her return, but she stayed with me until she passed away.

[Max W]

After he won the money, I don't see why any losses that came after that could not be deducted as he is now gambling with his own money.