It’s that time again, gathering up all the paperwork from the previous year and crunching the numbers. And for 2015, we are facing an unusual situation, for only the 2nd time we have to chalk up a loss. We had a very small one in 2002, but this last year’s was a much larger number.
A gambling loss is never a happy number, especially if you have played only when you had an advantage. If you have played in negative-expectation circumstances, you hope you will get lucky and win but if you are being realistic you should expect losses.
An advantage player has to be realistic too, accepting that your expectation to win is based on the long term. And the gambling gods do not specify how long the “long term” is. They certainly do not co-ordinate with the IRS and define it as running from January 1 through December 31.
Because we are doing plays with smaller edges than in the past, we aren’t overjoyed with a yearly loss but we understand it and aren’t discouraged or tempted to change course. For one thing we can look back over 30 years of casino gambling and see a huge plus number for that very long term. The 2015 loss suddenly looks very insignificant, a very small percentage downturn.
But more interesting is to add the 2014 and 2015 totals together. In 2014 we had the second biggest win in our 30 years. Add the much smaller loss in 2015, average the two years, and we came out ahead with about the same average yearly amount as we had the last 10 or so years. Looking back through our records, we saw immediately the reason for the difference in the two years was the number of royals we hit – or didn’t hit. For us the long-term unexpectedly meant two years instead of the usual one year. And if you don’t play very often, your long term may be many many years.
Speaking of taxes, I’d like to remind you of my book Tax Help for Gamblers, which gives complete information for both the recreational and professional gambler. It will answer a lot of questions for new gamblers who are getting their first W-2Gs and for more experienced gamblers who may be thinking of moving to the professional category. Many players who have accountants who are not gamblers themselves will recommend this book to them. Marissa and I updated it last year and nothing of major importance has changed for the gambler this year. This updated version is only available online. Go here to check out the Table of Contents and a sample chapter – you might need to scroll down before they appear. You can order directly from Amazon Kindle, Nook, or iTunes.
Similar situation here. Not so much from lack or Royals but being effectively no-mailed by 2 major chains is making profit from VP marginal at best. Looking forward to invoking Mayo (136 T.C. 81 (2011)) on my Schedule C to at least recoup the non-wagering business expenses.
When can we hope for the release of the updated FRUGAL books ?
Does Marissa’s book address the Medicare and Social Security implications of gambling income? I am approaching Medicare age and just recently became aware of the effects of gambling income on Medicare premiums. I believe there’s some social security implications as well.