Online Sportsbook taxes

[Bluegold14]

I need some help determining how to report winnings from a single online Sportsbook. I won’t be receiving any documents and actually ended the year in the red. I bet very minimal amounts but was wagering like $10 a game on 3 NBA games a night with maybe a football game too. Most would lose but a few would win and I basically just kept the money in and replayed it, like when you win one spin on the slot and then lose the next. My question is, how to I report this?  It’s my understanding that you don’t simply report the net outcome for the year (which would be a loss, actually). If my understanding is correct, I can count the outcome of a “session” but I don’t know what would constitute a session for this. Is it a single day, one session per sport per day???  I appreciate any help. 

[ErnieS0]

Yes, you can net your per session gambling income per Shollenberger v. Commissioner, T.C. Memo. 2009-306 (2009) on a per session basis. A session would be when you started and when you stopped.

Your gain and loss is computed as the difference between what you started and ended with. However, you can only net down to $0. Anything beyond that would have claimed separately as a gambling loss.

If you started with $100 and left with $200 you would have a $100 gain. If you started with $100 and left with minus $100, you would have gambling income of $0 and a separate loss of -$100, i.e. you can't start the next day at -$100.

As for what a session is, in LaPlante v. Commissioner, T.C. Memo. 2009-226, the court noted, "Respondent [the IRS] nonetheless agrees with petitioner's theory of recognizing slot machine play on the basis of net wins or losses per visit to the casino."

[Bluegold14]

@ErnieS0 Thank you for your response!  So, since I’m not physically visiting a casino, should the session just reset each day. Also, if I bet on basketball and football on a given day, would each of those be considered a separate session since they are different sports?  Thanks again!

[DianeW777]

Yes, your session would reset each day. As our awesome Tax Expert @ErnieS0 indicated with the link he provided and placed here for your convenience.  

• 'As for what a session is, in LaPlante v. Commissioner, T.C. Memo. 2009-226, the court noted, "Respondent [the IRS] nonetheless agrees with petitioner's theory of recognizing slot machine play on the basis of net wins or losses per visit to the casino."'

When it comes to the sports, it's a 'sports' bet regardless of what type of sport you are betting on.

[Bluegold14]

Thank you!  I still feel like I’m doing something wrong here. According to my understanding, the online Sportsbook (DraftKings) only sends out 1099s if your net profit was $600 or above.  We’re this the case, I would report the number on my 1099 and be done.  Since my net was actually negative, I won’t be getting a 1099 but now need to calculate my sessions which will result in my owing way more than if I would’ve netted over $600 and received a statement. So I thought we weren’t supposed to report straight net, but isn’t that what the Sportsbook themselves are reporting?

[MarilynG1]

If you didn't receive a 1099 (or a W-2G) to report gambling winnings, you can calculate your winnings/losses yourself.  If you had received a document, you would need to report the net winnings (as you mentioned) and pay tax on them. 

Most people have more losses than winnings, and since you can't claim losses that are more than your winnings, you don't have to report your winnings, either.

Click this link for more info on Reporting Gambling Winnings.