I won't get into state taxes or the details of standard/itemized
deductions, just the basic IRS premise that gambling winnings
are taxable. And, I won't get into such laughable Internal Revenue
pearls of wisdom like the fact that 'bribes received' are taxable
income, but 'bribes paid' are not deductible - yes, they really
In a nutshell, if your ticket pays more than 300:1 you must file a tax statement. If the amount is greater than $5,000 the fronton must also withhold 28 percent. If you get whacked like this, it will help if you can deduct losses to the extent of winnings.
Two ways around this (one 'legal', the other not):
'Ten Percent Charlie'
Who will cash your ticket for you for a 10% fee (we can only guess how HE reports it). This only works if you have a ticket in your hand - phone account and online bettors are S.O.L. And, it's illegal.
Below the Radar
Make sure your potential payoff is below the reporting threshold, and the IRS will never see you. Legal, but doesn't eliminate your requirement to report winnings (less losses, if you itemize).
How do you play this game?