Whether you report it or not, you need to be sure you keep detailed records of the back and forth of that $42K. If you don't report, make sure you can trace the money to show you had a net loss or at least no income to report. You could receive an inquiry for not reporting the income or for the details of your 'write-off'.
You can offset the income with expenses if you are engaged in the activity for profit by filing a schedule C (self-employed).
If it is a hobby, you have to report any income and you can't offset the income with expenses.
If you itemize instead of taking the Standard Deduction, you can deduct gambling losses up to the amount of your winnings. You won't be able to deduct gambling losses if you lost more money than you won (excess losses) or if you're taking the Standard Deduction. For example, if you have $5,000 in winnings but $7,000 in losses, your deduction is limited to $5,000.
See this article about gambling loss deductions for more information.
Any other type of activity could be reported, as described in the solution on this thread, as Miscellaneous or Other Reportable Income, with a negative entry for the amount that is not taxable income.
@burrito143333
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