Clarification on sports betting (Session definitions)

[Grand1]

I've read various interpretations from sports betting and how they define sessions.

For example,  if on one site (say DK) you had 10,000 in wagers, and 11,000 in wins, since it was from the same site, you can report the session (2020) as 1,000 in gross winnings, however, if you had a separate site (say FD) and had 1,000 in wagers and 900 in wins, you wouldn't take the net of both sites combined, instead you would do 1K in winnings, and for itemized deductions you can take the 100 in losses.     Can this logic be applied?

Otherwise you are adding 11,900 of income to be taxed on, and unless you itemize, you wouldn't be able to write off any of the 11,000 you lost (wagered).     So it would result in you being net positive 900 for the year, but having to pay taxes on quite a bit more income than that.

[Grand1]

I've read various interpretations from sports betting and how they define sessions.

For example,  if on one site (say DK) you had 10,000 in wagers, and 11,000 in wins, since it was from the same site, you can report the session (2020) as 1,000 in gross winnings, however, if you had a separate site (say FD) and had 1,000 in wagers and 900 in wins, you wouldn't take the net of both sites combined, instead you would do 1K in winnings, and for itemized deductions you can take the 100 in losses.     Can this logic be applied?

Otherwise you are adding 11,900 of income to be taxed on, and unless you itemize, you wouldn't be able to write off any of the 11,000 you lost (wagered).     So it would result in you being net positive 900 for the year, but having to pay taxes on quite a bit more income than that.

[npierson7]

Sports betting reporting requirements are the same like gambling losses and winnings. You have to report the whole amount of income and unless you itemize your deductions, you cannot offset the income with you losses. 

[Grand1]

Thank you for the reply, I've been seeing various interpretations that the entire 2020 on one sportsbook, can be counted as 1 session, so the net of that would represent your actual winnings or losses, which you would then report accordingly.    

Multiple sports book would each count as their own session, so if there were losses, they would need to be itemized.

However, if you on one site has 10K wagers, and 11k winnings, that session would count as 1K, while on the other site you had 10K wagers and 9.9K winnings for the yearly session, so the $100 could be itemized under losses.

[RayW7]

I am in agreement with @npierson7 but listed is some additional information that may be of value-

Gambling losses can only be deducted up to the amount of the gambling winnings.  Gambling winnings are reported on Form 1040 Line 21 as Miscellaneous Income.  Gambling Losses are reported on Form 1040 Schedule A as a Miscellaneous itemized deduction.  Gambling losses are not a one-for-one reduction in winnings.  Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

To enter, edit or delete Gambling Winnings and Losses -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Less Common Income
• On Gambling Winnings, click the start or update button

Or enter gambling winnings on w-2g in the Search box in the upper right of the program screen.  Click on Jump to gambling winnings on w-2g

-follow these links for more information-

Video: Guide to IRS Form W-2G Certain Gambling Winnings ...

Can You Claim Gambling Losses on Your Taxes? - TurboTax ...

[Grand1]

Thanks for the reply, can you provide more details on how losses aren't a 1 to 1 reduction of winnings?  Is this dependent on how much you are itemizing?    I put a few different numbers in to turbotax and it is indeed not 1 to 1, just curious how to calculate the exact reduction.  Thanks

[JeffreyR77]

The sports book is obligated to report the gross winnings not the net winnings to the IRS. 

So the W2G you receive from the sports book cannot be for the net amount. 

In order to claim gambling losses, you have to deduct losses as itemized deductions (which the sports book can provide you). 

You are limited to claiming losses up to the amount of gambling winnings you are reporting on your return.

Sports Betting Taxes Guide

[marktaxcpa]

None of these "experts" even understood your question.

"How does the IRS define a gambling session for sports gambling?" 

The netting of gains and losses greatly differs depending on how a gambling session is defined. 

There is nothing the tax code on the matter.   It refers to "transactions" to imply you do have the ability to use some sort of grouping.  I think a 24-hour period is the most likely answer from the IRS.   Defining a session by sporting event or sports season might be a possibility.  I do not think you can use a full year on a sports betting site to define your session.  Otherwise, the whole concept of the tax code for a casual bettor would match the general netting allowed for a professional gambler and thus not make sense.  

I think you may have to keep separate 24 hour results for the different gambling sites as well.  

[Brandtsaur]

Hi, I know this is late but still helpful information, and I’m actually building a course on profitable sports betting and demystifying gambling taxes for professionals and more casuals, it’s no surprise that these people you asked didn’t comprehend the question in its complete form because the IRS is so unclear on gambling taxes…

All gambling income is taxable and USUALLY can’t be netted unless a professional, this means that for sports betting for instance you are taxed on your gross winnings, typically if you receive a W2-g perhaps a misc for wins over $600 with a wager requirement of 300x some sportbooks like DK & Fanduel do have other thresholds as well which is why they are in more states than other books but this circumstance might have your win $ loss look like this… DK $100,000 in winnings 

FD -40,000 in winnings for a net of $60,000 unfortunately they don’t let casuals net unless itemizing which is not as popular with SALT CAP (this will change in 2025/2026 hopefully when Tax cut is removed and itemizing becomes more appealing) but you will be taxed on $100,000 to make it simple it could be much worse but I’m assuming you never had a winning bet on FD to make this simple. Paying far more taxes on income that isn’t real is a real issue and is avoidable by becoming a professional OR SESSION GAMBLING session gambling is very unknown as there is no court cases on it the IRS are only clear on session gambling for slotted, I don’t think it’s wise to consider a session more than 1 day unless it’s a tournament spanning over more than 1 day. I use a lot of arbitrage sports betting and if I wasn’t a professional I would try to session gamble each individual ‘trade’

for instance Travis Kelce Over .5 TD +155 $3,000 (DK)

Travis Kelce Under .5 -125 $4,250 FD

This is an arbitrage bet, no matter what side wins the dollar amount won is $400 but IRS doesn’t wanna tax only $400 they want a bigger piece to tax which is ridiculous so for casuals that have these situations come up a possible solution is Session Gambling even though these are two different sportbooks I believe it is possible to session these because it’s the same event/bet placed at the same time and then this would be a session ending in $400 in proof it/income it’s important to note negative winnings (losses in a gambling session can’t be subtracted from a previous gambling session winning that losing session basically evaporates into thin air. 

gambling session is 100% a thing and you can’t ask anyone at H&R Block about gambling taxes because they are scared of their own shadow in regards to gambling taxes, I would seek out a CPA probably in the Vegas area as they will have far more experience. For me it’s a business, and the IRS is tricky with what constitutes someone being a professional as well, there are court cases on that matter if you are curious, basically stating treating it in a business manor (daily log, expenses, time, location (state & site) wins & losses type of bet, if it was money or bonus funds etc, having records to back that up goes a long way to being a professional this whole 40 hours a week and not having other income is just spooky no other buisness has those requirements to being a professional, and their is a trucker case where they have other income and are still professional odds are you won’t have to deal with this in court being a professional unless you don’t make profit, don’t record keep, switch between benign a pro and not, so don’t abuse this. I think being. Aggressive with gambling sessions the way I explained is possible it’s likely you will be asked about it by the IRS but highly doubt they want to go to court over something like what I showed it’s the same bet in the same player just on a different side on different sports, because the IRS is not clear (left vague on purpose) my belief is this is totally doable until they close this loophole for casual gamblers. Not a Licensed CPA or anything but this is my two sense and would recommend contacting a professional that’s not scared of their own shadow. Best of luck!