After 30 years as a tax pro + 8 years of teaching the income tax prep course, I can concur with the TT FAQ ... this has always been the rule. If you want to enter less than what was reported on a W-2G then by all means do so and when the CP2000 notice shows up in a couple years you can have this debate with the IRS so keep good records to support your position.
Now the Rev code you sited has to do with the netting of the slot machine payout that you take to the window to cash out. If you put in 100 and get out 5000 then the casino will report the 5000 and so must you. On your return you can deduct the 100 on the Sch A if you itemize. Same thing if you had put in 5000 but only cashed out 100 ... 100 is the winnings and the 5000 is reported on the Sch A. Most casinos will give you a printout (Commonly referred to the win/loss statement) if requested to use to support your position.
