In a recent court case, it was determined that a compulsive gambler can offset winnings with unsubstantiated losses.
In 2014, he spent countless hours playing slot machines in four casinos. The casinos issued 160 Forms W-2G, reporting cumulative gross winnings of $350,241.
The gambler claimed his losses exceeded his winnings, but he had no records to substantiate the losses.
The Tax Court relied on expert witness testimony and the man’s financial history to conclude he had no net gambling earnings in 2014. It allowed losses to fully offset the winnings
But you still need to be able to itemize on Schedule A to deduct the losses.
Coleman, TC Memo. 2020-146