Blackjack, bet strategy and Taxes

Haven't started a thread in a while ( I think the Mods closed my last one, poste haste ;-)

I was thinking, always makes my head hurt. Something along the lines of:

It's a new year. I haven't had the opportunity to play yet this year, until today.
So I'm a lifetime loser, but I win occasionally so I have to keep clear, concise, and detailed tax records of the losses to offset the occasional wins come the the dreaded year end 'Final Accounting'.

Now what if I go win a little today, let's call it $1,000 ( 1K ), and it's still early in the day. Now I owe taxes on that win, call it 30% or $300, just to give us a point of reference for the question. I can take my $700 and go home, and carry along the $300 I'm saving for my Uncle Sam. Or I can start making larger bets figuring that for each of those bets I'm betting 70% my money, and 30% Uncle Sam's money. If I win, I win. If I lose $1K, then I really just lost my $700 plus Uncle Sam's $300.

Now the real question is, take my $700 and go home, or leverage it w/Uncle Sam's $300?
Serious question.

<edit > I need to add a statement that: "I realize that many, if not most, do not accurately track their winnings and losses in casinos and report those records correctly for tax purposes. However there are people in the world that have to do just that, or simply want to do just that." Pretend the question was posed by the current Director of the IRS. His filings have to be, or at least should be, squeaky clean.

Quote: TwoFeathersATL

Now the real question is, take my $700 and go home, or leverage it w/Uncle Sam's $300?
Serious question.

Until you stop, you don't win or lose yet in IRS eyes. If you mean you'd actually take account of your status at midnight, that is so squeaky even the IRS director with cameras recording all might not do it. Assuming midnight matters, I'd be the wrong guy to ask.

And once you go home, you're going home a winner or a loser, no longer gambling.

You should put the $300 aside for Uncle Sam if you go home with $1k won and know you'll be in that tax bracket and also know you'd never have the money any other way. If you are a yr-end loser who can verify it, you can take that money back out.

To take your question seriously, I'd say playing with Uncle Sam's money is not what the problem is for the gambler who goes on tilt. You say it is a serious question, but I honestly have to say it is not even in the equation.

Even more seriously, a gambler who tried to be honest, report his winnings that are not on W2-g and balance them off with his losses, and did his taxes that way, would need his head examined. You could go from a gambler the IRS doesn't know is a gambler and doesn't care squat about to a guy getting an audit. A guy with an audit concluding he didn't verify his losses the right way, and owes interest and penalties.

The IRS regs want wins or losses tracked by 'session', with session not very well defined. That part is not hard for me because I tend to play longish sessions at a single table. The question was more about upping your avg bet if you got ahead during a session, and it is taxable. In my case, it's taxable, my wife's employment makes it imperative, at least in her eyes. So the IRS has been seeing my win loss records for a few years.

I still probably need my head examined, but for several different other reasons ;-)

I had asked a similar question back during the last big lottery. If you won 1.5 Billion, should you consider tossing a 10 million bet at the Super Bowl, because you look at a portion of the money as something you already owe Uncle Sam. Does that change the "math" of the bet?

I think big business does this all the time with plant and equipment purchases, and certain expenses associated with mergers and acquisitions. Even small and medium size businesses. Build your business, squeeze your competition even, with money that you were going to have to hand over in taxes otherwise.

Bump, with a follow-up.
Lots of good minds, some exceptional minds even, and some free thinking minds as well on these forums.
I had hoped for more responses, not that I deserved any or anything, was just a hope.

So I did have my first session of the year, played tentatively (for me, usually bull in china shop is my style).
H17 3:2 BJ, no surrender. $10-$1000 table.
Played tentatively cause my last 3 nights in 2015 wore out my bankroll ;-) in a bit of the doghouse w/Mrs Sparkles to start a new year..... But angel that she is, she let me go play.

Went in with 5K, walked out 5 hours later with 10K, good for a change. A dent in the lifetime cost of this hobby, which is much better than an expansion ;-) And I did play a little more aggressively the latter half of the session, for the theory discussed above.

She may even let me play again ;-)

And it's snowing in ATL, a rare and pretty sight! Weather looks good for a ski trip in NC this weekend,,kids out of school 2 extra days, and some more vouchers laying around ;-)

Just my two cents.

What you face is part of my own internal dialogue sometimes, albeit with different numbers. I track all the expenses, mileage, wear and tear on my car, food, drink and of course, the inevitable taxes.

Something to keep in mind: If you've the discipline to document it, once you've won the 1k, if you lose all of it - you no longer owe $300 to Uncle Sam, as the loss of 1k offsets your gain. For IRS purposes, it's like you never won or lost. Too bad you can't offset income when you lose more than you win!

If I had won 1000 yesterday (I went not to use free play, but to play some of the newer styled games (to me) at the Scarlet Pearl, I would have likely gone home.

Unfortunately, I only won $170; and I still went home, with a comped King Cake.

I am of the mindset that when I win a tidy sum of 1k, I skim a portion for my retirement, a portion for fun and the rest to sit in my checking account for withdrawal to gamble again at a later date. I don't even consider it won, or mine to do anything with until I'm home. But, that's me and I'm sure I'm quite different than most people.

Quote: TwoFeathersATL

I had asked a similar question back during the last big lottery. If you won 1.5 Billion, should you consider tossing a 10 million bet at the Super Bowl, because you look at a portion of the money as something you already owe Uncle Sam. Does that change the "math" of the bet?

In my case, if I had that kind of money, i don't think I would gamble at all. I know that if I have billions, getting another 10 million is meaningless to me. I'd probably spend 10 million bringing everyone I knew to the big game, but not risk it gambling.

In other words, if I'm already filthy rich, there's no need to create risk for myself.

Quote: ukaserex

In my case, if I had that kind of money, i don't think I would gamble at all. I know that if I have billions, getting another 10 million is meaningless to me. I'd probably spend 10 million bringing everyone I knew to the big game, but not risk it gambling.

In other words, if I'm already filthy rich, there's no need to create risk for myself.

Thx for the response. I can only say back, the play is fun - at least for me ( and hundreds of millions of others that have paid for the casino palaces around the world ). So if I had the 1.5 billion freshly won from the big lottery, I still think I'd bet 10 mill on the Superbowl, and I'd take a bunch of people and WATCH the Super Bowl too! And I'd write off the watching part as an entertainment expense for all the 'potential new investors in my latest and greatest hair brained, world changing, global manufacturing sexually connected business plan ( think virtual sex ;-) note: I don't have that plan, but I'd put one in place to be able to tax deduct the taking of my friends (potential investors) to the game ;-)

I understand better now what you are talking about.

It strikes me it is kind of the same question as: "should I spend money on this and that deductible thing, because my accountant says I don't have enough deductions?"

And I think the answer is always, you misunderstood your accountant. He was explaining why you pay as much in taxes as you do, he wasn't saying to get a bigger mortgage [or whatever]. You are always better off not having the expenses, it should always be a matter of what you wanted to do in the first place.

Quote: odiousgambit

I understand better now what you are talking about.

It strikes me it is kind of the same question as: "should I spend money on this and that deductible thing, because my accountant says I don't have enough deductions?"

And I think the answer is always, you misunderstood your accountant. He was explaining why you pay as much in taxes as you do, he wasn't saying to get a bigger mortgage [or whatever]. You are always better off not having the expenses, it should always be a matter of what you wanted to do in the first place.

I beg your pardon, but I think you still don't understand the question. Don't feel bad, I don't fully understand the question either. I am the accountant ( not really, Sparkles is the accountant, but we file jointly). If there were no taxes to be considered, there would not be a question to begin with. Add the taxes into the betting equation and it gets a bit more complicated.

It is not the same as saying, "I won 1K so now I'm playing with the casino's money". I know how to refute that statement. It's more, "I just won 1K and I get to keep $700 and send $300 to uncle, or I can afford to spin the 1K wheel with a house edge of .75%". If I win, I owe more taxes (fine, because I get to keep the rest of the winnings). If I lose, I bet $700 of my money and $300 of Sam's money to make a $1K bet against a game with a house edge of 0.75%. I think that is a good bet, admittedly a very special circumstance in the way I just laid it out, but I think there are interesting ramifications. Once again, I "have to pay taxes on ALL my winnings but get to deduct any losses against them under the ridiculous tax code that I live under".

The Lord Giveth. And the IRS Taketh Away.

Quote: TwoFeathersATL

If I win, I win. If I lose $1K, then I really just lost my $700 plus Uncle Sam's $300.

Now the real question is, take my $700 and go home, or leverage it w/Uncle Sam's $300?
Serious question.

Not exactly.
I agree that If you lose, you lose $700 and Uncle Sam's $300.
BUT the same applies also if you are winning.
If You win, you do not win $1.000. You win $700 and Uncle Sam also wins $300.
When you place the $1.000 bet you are basically beting from your own Bankroll $700 and from Uncle Sam's bankroll $300.
So your thinking is not correct.

Where there is a difference is when the outcome of your bet will turn your yearly profit into loss or vice versa.
And also when the outcome will put you into a different tax bracket.
This assumes that this is the last bet you will make this tax year.

Quote: AceTwo

Not exactly.
I agree that If you lose, you lose $700 and Uncle Sam's $300.
BUT the same applies also if you are winning.
If You win, you do not win $1.000. You win $700 and Uncle Sam also wins $300.
When you place the $1.000 bet you are basically beting from your own Bankroll $700 and from Uncle Sam's bankroll $300.
So your thinking is not correct.

Where there is a difference is when the outcome of your bet will turn your yearly profit into loss or vice versa.
And also when the outcome will put you into a different tax bracket.
This assumes that this is the last bet you will make this tax year.

Thank you for your response AceTwo. I am still struggling with the question ( that's a good thing BTW ). Once I enter losing territory, which I assume I will,,the question will be filed away with a bunch of other questions. I am working on a book, will prolly never finish it, the world will proceed w/o my insight, of this I have no doubt.

Quote: TwoFeathersATL

The IRS regs want wins or losses tracked by 'session', with session not very well defined. That part is not hard for me because I tend to play longish sessions at a single table. The question was more about upping your avg bet if you got ahead during a session, and it is taxable. In my case, it's taxable, my wife's employment makes it imperative, at least in her eyes. So the IRS has been seeing my win loss records for a few years.

I still probably need my head examined, but for several different other reasons ;-)

I had asked a similar question back during the last big lottery. If you won 1.5 Billion, should you consider tossing a 10 million bet at the Super Bowl, because you look at a portion of the money as something you already owe Uncle Sam. Does that change the "math" of the bet?

I think big business does this all the time with plant and equipment purchases, and certain expenses associated with mergers and acquisitions. Even small and medium size businesses. Build your business, squeeze your competition even, with money that you were going to have to hand over in taxes otherwise.

Betting 10 million on a single football game that you're just guessing at even without vig is horrible -EV because if you win you pay taxes.