Craps Laundering

Ok so the recent post on craps odds made me wonder something. Everyone would probably agree that it's better to be recorded as a loser for A. tax purposes and B. casinos treat losers better.

So say I go to a casino with great craps odds (25x, 50x, or 100x). I WALK OVER, I say I'm looking for my player's card, and I make a $50 pass line bet. When the point is rolled I take my odds for $5000. If I win, great I walk away and do this somewhere else. If I lose, I tell them I found my player's card, they enter my loss into the system, and I hang around for a while betting smaller amounts.

A $50 pass bet only costs me about 70 cents on average. But now I have a $5000 loss in the computer and I can request a win/loss statement to prove it. This seems like a great way to avoid paying taxes on a jackpot or a large payout that makes you fill out paperwork. You could also do this if you were a card counter and wanted the casino to think you were down money.

Obviously it wouldn't work once they got to know you better and you'd still be risking a lot of money. But if you're a gambler it seems to be a good way to cut your taxes and reduce your heat for a very cheap price. Let me know what you think.

How many want a poll on whether this guy ever plays craps. " I sit down, ..." At a craps table?

So go ahead and bet big on your first roll then either stay or walk. Casinos will track you eventually. You will get comps only when you stay around and play.

What do you really gain by all this?

I guarantee you anyone offering 100x odds is savvy about the fact that you don't comp when EV=0. Frankly you probably arent *really* welcome to *really* do 100x so nobody starts smiling big.

Quote: odiousgambit

I guarantee you anyone offering 100x odds is savvy about the fact that you don't comp when EV=0. Frankly you probably arent *really* welcome to *really* do 100x so nobody starts smiling big.

I was going to say that.

But for tax purposes, the casino should record the big loss and reflect that on the statement. So that would still work. Not that losing large amounts of money at a casino is in any way difficutl, of course...

Quote: FleaStiff

How many want a poll on whether this guy ever plays craps. " I sit down, ..." At a craps table?

So go ahead and bet big on your first roll then either stay or walk. Casinos will track you eventually. You will get comps only when you stay around and play.

What do you really gain by all this?

Alright so that was a poor word choice you got me there.

If you actually read the post you would see what you gain by this. I know that this is not going to get you huge comps or last forever. There were too main purposes of this strategy:

1. Get a statement of your losses so you can avoid paying taxes on any big wins at the casino
2. Disguise your winnings so advantages players can get more playing time before getting banned

This doesn't apply to everyone nor is this some betting system that's going to make you rich. However, this could easily save somebody a few thousand dollars in the right situation.

Quote: Nareed

I was going to say that.

But for tax purposes, the casino should record the big loss and reflect that on the statement. So that would still work. Not that losing large amounts of money at a casino is in any way difficutl, of course...

The difference is that you can record big losses without having a large expected loss. Say you win a bet and lose a bet. You're still up but the casino records you as being down big.

Btw expected loss on a pass lines bet with 100x odds is .021%. So if you bet $10,000 you're expected loss is only $2.10...

I missed the tax thing.

There is always one big problem with having losses cut your taxes, and that is that you have to really lose that money.

Of course, if you are going to be making those bets anyway, come hell or high water, then you might try to manipulate it all, but this is a tax cheating scheme, you scoundrel ! [g]

Quote: iwannaiguana

The difference is that you can record big losses without having a large expected loss. Say you win a bet and lose a bet. You're still up but the casino records you as being down big.

If you want large expected losses, I think you should play carnival games with side bets, the more side bets the better. It's easier to spread out, too. At any Caesars property, for example, you can play 3CP with two side btes. So play $5 on ante and play, and $50 each on the pair plus and six card bonus. That's $110 for every hadn you don't fold, and $105 in hands when you do.

The house edge on those bets is awful, ergo the expected loss must be big. You'd also accumulate time at the table, which ought to help with comps.

Quote: iwannaiguana

Ok so the recent post on craps odds made me wonder something. Everyone would probably agree that it's better to be recorded as a loser for A. tax purposes and B. casinos treat losers better.

So say I go to a casino with great craps odds (25x, 50x, or 100x). I WALK OVER, I say I'm looking for my player's card, and I make a $50 pass line bet. When the point is rolled I take my odds for $5000. If I win, great I walk away and do this somewhere else. If I lose, I tell them I found my player's card, they enter my loss into the system, and I hang around for a while betting smaller amounts.

A $50 pass bet only costs me about 70 cents on average. But now I have a $5000 loss in the computer and I can request a win/loss statement to prove it. This seems like a great way to avoid paying taxes on a jackpot or a large payout that makes you fill out paperwork. You could also do this if you were a card counter and wanted the casino to think you were down money.

Obviously it wouldn't work once they got to know you better and you'd still be risking a lot of money. But if you're a gambler it seems to be a good way to cut your taxes and improve your comps for a very cheap price. Let me know what you think.

The "free odds" will in all likelyhood not count towards your loss total for comps since the theoretical loss on free odds is $0.

A few things. Once again I reiterate that the purpose of these bets is not to accumulate comps..

Also the whole idea is that you only give the dealer your player card if you lose, and then you walk away. So your losses are recorded but not your winnings. This doesn't mean you are expected to lose overall. The whole idea is to have LOW expected loss while showing a HIGH recorded loss.

Yes, I suppose this is somewhat of a tax scam. I should have added an option to the poll: This is highly immoral, who would ever want to cheat the government out of your hard earned winnings.

Quote: iwannaiguana

Also the whole idea is that you only give the dealer your player card if you lose, and then you walk away. So your losses are recorded but not your winnings. This doesn't mean you are expected to lose overall. The whole idea is to have LOW expected loss while showing a HIGH recorded loss.

Ok. But that works just as well on any other game with a simialr house edge. Maybe BJ or Baccarat?

Quote:

Yes, I suppose this is somewhat of a tax scam. I should have added an option to the poll: This is highly immoral, who would ever want to cheat the government out of your hard earned winnings.

Who in their right mind wouldn't?

Quote: Nareed

Ok. But that works just as well on any other game with a simialr house edge. Maybe BJ or Baccarat?

There is no other game that I know of where you can bet this big with such a small house edge.

Craps 100x odds - .021%
Craps 20x odds - .099%
Blackjack - about .5%
Baccarat (banker) - 1.06%
Roulette - 5.26%

Also, the idea is that you make 1 big bet and walk away.

Quote: Nareed

...the casino should record the big loss...

Casinos only record average bet. They do not track actual bets, wins or losses.

The 'statement' they provide is not a Profit/Loss statement, but theoretical P/L.

I suspect this isn't about comps, but an AP cover.

Regardless, it's clever.

And yes, they attempt to record your actual profit/ loss, not just the theoretical. The theoretical is shown, and then your actual. Then there's sometimes a standard deviaton for how far you are outside the norm on the form. Over a period of time, when APs get to far outside the norm. the casino host will sometimes begin to refuse airfare reimbursements, etc. Adding the losses helps keep you where you "belong" among the other players.

Quote: DJTeddyBear

Casinos only record average bet. They do not track actual bets, wins or losses.

The 'statement' they provide is not a Profit/Loss statement, but theoretical P/L.

Ok, your reply is the first to make a legitimate point. Are you sure this is the same at all casinos? I came back to a casino after losing $400 there the previous day and the first thing the dealer says is "I guess I still owe you for the $400 we marked you down for." I thought that when they color you up they try to record more or less what you cash out with. Of course I'm no expert on the subject, but that's what it appears to me.

If you are correct then what a gyp the gov. gives us... They tax us on all our winnings, but we can only claim our "expected" losses.

Quote: DJTeddyBear

Casinos only record average bet. They do not track actual bets, wins or losses.

The 'statement' they provide is not a Profit/Loss statement, but theoretical P/L.

I don't think that is the case in every casino's tracking system. The reason I say that is that I always ask for my "average bet" when talking to the pit boss but the host I have at one casino speaks about both the "average bet" and the "amount won/lost". The floor also makes a big deal of knowing every buy in amount (they then record it), chips traded for lower denominations, and they are also pretty vocal about getting you to "color up" when you leave a given table.

That casino's won/loss pretty much reflects what they think the numbers are...

DJ is in error.

The theoretical is shown, and then your actual profit/loss. Then there's sometimes a standard deviaton for how far you are outside the norm on the form.

Bear in mind that any tax manipulation means showing some kind of loss overall, you can't use gambling losses to reduce your taxes in general, just to offset all your winnings so you don't show that you are ahead in your gambling.

I guess some casinos can try to do a good job on the actual win/loss, I would still question the accuracy.

I mean, do they track EVERY buy-in? What if you come to the table with chips?

Do they accurately record the color up?

What if you either don't color up, or put come chips in your pocket before coloring up?

As the OP specifically stated that this methodology would be used to avoid taxes, I will only stick to that. I have 2 problems with the idea, however.

1) As a casual gambler, claiming your gambling losses on Schedule A, you can only claim losses up to the amount of your wins. Thus, following your methodology for several trips, let's say 4 trips throughout a year, you could have 4 losses totaling $20k. But you don't have any wins to offset that amount, so you wouldn't be able to utilize it as a tax deduction anyway. If we increase our number of trips to 8, with 4 wins totaling $20k and 4 losses totaling $20k, then we have $20k in reported income, and $20 in tax deductions. You could, of course, attempt to manipulate your reported losses and reported winnings in order to achieve this balance. However, this will not do you any good should the reported winnings push you into a higher tax bracket, thus forcing your non-gambling income to be taxed higher and making your gambling losses deduction not very useful. Of course, someone willing to gamble $40k a year probably doesn't have to worry about getting pushed into a higher tax bracket.

2) As a professional gambler, you report your wins and losses on Schedule C as any other business would. However, in this case, all of your losses are business expenses, and thus they are much more useful as business losses than the casual gambler. However, since you are a business, you have a multitude of other expenses which you can utilize as business expenses which will also reduce the amount of taxes you would have to pay in the first place, including, but not limited to, the expense of reaching gambling locations such as airfare, rental vehicles, hotel rooms, etc. As with any business, utilizing the proper and correct business expenses will likely reduce your net income to nearly 0, if not to the point of being a net loss and thus owing no taxes anyway. As with the casual gambler, you may decide you want to report as many losses as possible while keeping reducing the reported winnings or hiding some of the winnings. However, as a professional gambler, you will have to prove that the large majority of your income comes from gambling, and isn't simply a hobby (casual gambling). Thus, your life expenses will have to match up to your business net income. In other words, you cannot claim that your business earned no money for the year, and yet you still somehow managed to pay $1500 a month mortgage. The IRS will eventually want to know where that money is coming from. Further, most of the time, you have to show a profit at least some of the years that you operate your business, or the IRS can declare that your business is really a hobby, and thus eliminate your ability to utilize those losses as business expenses. In addition, while I don't know this personally, I've heard that the IRS is a bit pickier on people claiming to be professional gamblers, and may have their own set of conditions that they require as proof.

In either case, the only reasonable case in which you would want to hide your winnings is if your winnings greatly exceeds your losses. For example, if, throughout the year, you were to win $100,000 and manage to only lose $10,000, thus having net gambling winnings of $90,000. However, if that is the case, simply write a book about how you are able to win $90,000 a year and make even more money. Seriously though, in my years as an accountant, we used to say that if your biggest problem is that you made SO much money, then you probably don't really have a problem.

Quote: iwannaiguana

Yes, I suppose this is somewhat of a tax scam. I should have added an option to the poll: This is highly immoral, who would ever want to cheat the government out of your hard earned winnings.

Since your scam is pitifully easy to dream up, the government has already thought of it. You cannot show a loss at gambling on your tax form. The only purposes of recording losses is so that you have something to balance against your winnings. For most people the only reason to report winnings, is if you win a large enough amount at one time, that the casino is forced to report your win to the IRS.

So the scam is a no go from concept stage.

Quote: iwannaiguana

If you are correct then what a gyp the gov. gives us... They tax us on all our winnings, but we can only claim our "expected" losses.

I am not an accountant, and I do not play one on TV.

For a moment, let's assume that you are actually an honest person and try to file your tax returns in accordance with law and IRS regs. In that scenario, you report all of your gambling winnings and all of your gambling losses. You pay taxes on any net positive amount, but you don't get to deduct net gambling losses. Yes, that seems a little like a "gyp", but it is not the same as taxing all "real" winnings and only deducting "theoretical" losses.

The statement that you receive from a casino may or may not provide the information necessary to report your winnings and losses. You need to maintain your own records and be able to explain any discrepancies between your records and the casino's.

I have heard rumors that some states (Hawaii?) and even the federal government have considered changing the laws to tax all gambling winnings but not allow any deductions at all for gambling losses. Now that is something I would consider a gyp.

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Quote: Keyser

I suspect this isn't about comps, but an AP cover.

Regardless, it's clever.

And yes, they attempt to record your actual profit/ loss, not just the theoretical. The theoretical is shown, and then your actual. Then there's sometimes a standard deviaton for how far you are outside the norm on the form. Over a period of time, when APs get to far outside the norm. the casino host will sometimes begin to refuse airfare reimbursements, etc. Adding the losses helps keep you where you "belong" among the other players.

This is pretty much what I had in mind. I count cards so this way when they see I'm up big in BJ it doesn't raise any red flags because I'm down more in craps.

I realize you can't use it to get a big deduction on your income taxes. But it will offset gambling winnings so you don't pay taxes on those.

gofaster87:

That's pretty much why I said I would consider it a gyp. But that doesn't mean that governmental units have not considered it. They consider a lot of things when they need "revenue enhancement." I think the British and the Canadians have a better system for gambling taxation, except that the U.S. government would feel the revenues are not enhanced enough.

Quote: iwannaiguana

I realize you can't use it to get a big deduction on your income taxes. But it will offset gambling winnings so you don't pay taxes on those.

Before you do anything, run the idea past your accountant (or any accountant). As I implied, a tax dodge is a good idea, but only if it actually lowers your tax bill.

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If I were gonna do this, I would place the $5000 on a single number in roulette while hunting down my player's card. That way I either get the demonstrable $5000 loss that I wanted, or I win $175,000.

But I tend to agree with others that being able to demonstrate a $5000 loss is of questionable utility.

Quote: heather

If I were gonna do this, I would place the $5000 on a single number in roulette while hunting down my player's card. That way I either get the demonstrable $5000 loss that I wanted, or I win $175,000.

But I tend to agree with others that being able to demonstrate a $5000 loss is of questionable utility.

The idea is to do this multiple times. Having them record a $20,000 loss is pretty significant. That could cancel out taxes on a big jackpot you hit or reduce the heat big time if you're an AP. The difference is your average loss on the roulette bet is $250 whereas in craps it's $2.50. Also less variance than a single number bet.