Under current tax law, you can only deduct gambling losses to the extent of winnings reported, and only if you itemize your deductions, unless you are in business as a professional gambler.
If your total itemizable deductions including the gambling losses (limited to winnings) don't total more than your standard deduction, you can't claim any additional amount for the losses and you would be limited to the standard deduction.
This article provides more helpful details on this topic.
You didn't really answer the question. Turbo Tax is treating the prize from the 1099 misc separately from gambling. For example, If I have a 1099 Misc for a prize of $1000 and I have W2-G's totaling 10,000. Shouldn't I be able to deduct $11,000 for losses if I have that and more and I am itemizing deductions? TurboTax only allows me to deduct the $10,000 and not the $11,000 that includes the prize of $1,000. Is there a place that I can deduct the prize winning of $1,000 from the 1099 Misc if I have gambling losses much greater? In my state taxes, it allows me to deduct both.
Instead of entering the 1099-MISC on your return, report your gambling winnings directly in the Gambling Winnings section of TurboTax.
On the Wages and Income section of your return, scroll down to Less common income. Click Start or Revisit next to Gambling winnings.
On the next screen, choose Yes.
Choose that you did not receive a W-2G.
When asked if you received gambling or lottery winnings not reported on a W-2G, select Yes and enter the amount of winnings that you received. This will categorize your income as gambling winnings that can be offset with your gambling losses.