Confused227,
The gist of the advice here is that you report the W2-G form in TurboTax, put in gambling losses up to the amount of your winnings, and do not enter the 1099-K transactions report from PayPal. Hopefully, the IRS will rethink the whole 1099-K scheme in the future.
That said, the amounts of your transactions seem quite large for a person who simply likes to risk a couple hundred bucks at a casino a few times a year. If you, on the other hand, consider yourself a usually successful professional gambler, i.e. one who seeks to make a living gambling and comes out ahead for most years, then the gambling income and expenses would go instead on a Schedule C.
