Gambling losses do not offset gambling winnings dollar for dollar. Instead, they are an itemized deduction and you get no tax benefit from itemized deductions until all of them together add up to be more than your standard deduction.
2016 Standard Deduction
Taxpayer under 65, not claimed as a dependent
$6,300 for Single
$12,600 for Married Filing Jointly, or Qualifying Widow(er) with dependent child
$9,300 for Head of Household
$6,300 for Married Filing Separately
For over 65 or blind, add $1,250 for each instance or add
$1,550 each instance if single and not a surviving spouse.
Even if your itemized deductions are greater than the standard deduction, an added dollar of deduction only reduces your tax by your marginal tax rate. For example, if you are in the 25% marginal tax bracket, an added dollar of deduction reduces your tax by 25 cents.
