The form 1040 calculates your Adjusted Gross Income before deductions are taken, so it includes all of your winnings, but none of your gambling losses, as deductions are on the following page. For most people this is no big deal, as taxes are calculated on income after deductions.
But if you're a senior on Medicare, your premium is based on your A.G.I., and is subject to a High Income Premium Adjustment. I was paying a couple thousand a year extra in premium adjustments until it occurred to me to file as a professions gambler. Schedule C (business gains and losses) allows you to deduct your losses prior to the calculation of your A.G.I. The IRS confirmed this was OK if gambling was my sole source of earned income and I played seriously and on a regular basis. I amended as many returns as I could and received a check reimbursing me for over $7K in excess High Income adjustments.
