Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is a Gambling Loss?

A gambling loss is any money lost in lottery tickets, slot machines, table games (craps, poker, blackjack, etc.), bingo games, racing bets and keno.

How Does a Gambling Loss Work?

For example, let's say John Doe goes on a bender in Las Vegas and wins $12,000 the first night but loses $10,000 at the craps table in the Bellagio the next night. He comes home empty-handed and has to sleep on the couch for a few weeks because the Bellagio sends him home with a W-2 for the $12,000 he won, even though he incurred $10,000 of gambling losses the next night.

Why Does a Gambling Loss Matter?

The IRS allows taxpayers to deduct gambling losses if they itemize their deductions. The amount of losses a taxpayer deducts cannot be more than the amount of gambling income reported on a return, however. In our example, this means that although John Doe has to pay income taxes on the $12,000 he won, he also gets to deduct the $10,000 he lost as a gambling loss, which offsets the tax.

It is important to note that in order to do this, you must keep records of the loss, such as the table number at which you played, your losing lottery tickets, etc. It is also important to note that you must report gambling winnings in order to deduct gambling losses -- the cost of a streak of bad lottery tickets with no wins is generally not deductible.

Ask an Expert about Gambling Loss
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Gambling Loss.
Be the first to ask a question

If you have a question about Gambling Loss, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Gambling Loss, then please ask Paul.

Ask a question Read more from Paul

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
Paul Tracy - profile
Ask an Expert about Gambling Loss

By submitting this form you agree with our Privacy Policy

Share
close