Taxes

An Old Gambler

An Old Gambler

Yes, I want to talk about aging and being 84, I feel well qualified to discuss the topic. Of course, getting old is such a broad subject that it could and has filled many entire books. In this post, I want to talk about old age and gambling, specifically seniors who play video poker.

If you’re a regular reader of the content on this website, you might note, “In his last column, Bob Dancer wrote on this same subject.”

I said that same thing to myself when I saw his post in the middle of writing mine. No, Bob and I don’t discuss what we’re planning to write about,  but I’ve been amazed how many times we’ve ended up mining the same veins.

Perhaps that’s not surprising. Over the course of our long careers, we’ve often played the same games and the same promotions in the same casinos. We’ve also come across the same casino news that affect playing conditions. And as active players, we experience many of the same emotions and psychological factors. However, our similar-subject articles aren’t competing; hopefully, they’re both helpful by presenting a subject from different angles.

The impetus for this post comes directly from my experiences in the last few weeks. I’ve been planning an upcoming trip to Reno, where I’ll be working to extend my CZR Diamond Elite tier status for another year. Since I’ll be playing NSUD, I wanted to refresh my memory on that strategy. I hadn’t played the game for more than a year, since a trip to Harrah’s Cherokee last March, but having played it so much in my life, I believed a few sessions with my software tutorial would quickly get me to max accuracy.

Wrong. When I hit the computer, boy, did I have a rude awakening. The error notification feature had to work overtime! True, many were minor errors that even on a $5 game would be only a 5- or 10-cent theoretical loss. But some were major and costly. On one hand, I clicked on a 4-card straight flush instead of a dealt dirty royal; that was a more than $180 loss!

This story isn’t quite as bad as it sounds. Whenever I brush up on a strategy, the best way to find my weaknesses is to put the program on “Perfect,” then play as fast as I can. Also, I practice late in the evening when I’m tired. My errors reveal what plays I need to review on my strategy chart, then be extra aware of at the casino.

After frequent sessions the last few weeks, I’m getting back to the accuracy levels I want. However, I do feel that this is a harder job than it was even a few years ago. My mental processes are definitely slowing down. Then again, I’m of my own dictum about video poker: “Speed kills.” This note of caution has always been good for me to remember, but as I get older, it’s much more important to slow down, both for my memory and energy.

I’m hoping to meet up with some fellow Frugalites on my trip to Reno next week (March 17-20). I’ll be staying at the Silver Legacy. Drop me an email if you’ll be there and want to chat and we can arrange to meet. [email protected]

———————–

One last possible happy gambling note. I say “possible,” but I’m not holding my breath; it has failed so many times before, including just last year. But Nevada Representative Dina Titus is again proposing legislation to raise the tax reporting for machine play (requiring a W-2G) to $5,000 and indexed to inflation, so that the amount would keep up in the future. The current $1,200 was made a policy in 1977, only 46 years ago! Of course, this adjustment is long overdue, but the IRS knows that any reduction in the paperwork will give many more players an excuse not to report gambling income.

 

Tax Help Q+A

Tax Help Q+A

Down through the years, many casino players, and especially regular readers here, knew that when they needed information about how to handle gambling figures on their tax returns, they could go to the most current edition of Tax Help for Gamblers. Thus, I didn’t get a lot of questions during tax season.

However, this year has been different. The questions have been coming in right and left. Plus, I’m seeing far too much bad advice on the Internet. Case in point, see the comments on the recent QOD on tax questions.

Why more questions, you wonder? One reason could be a whole new generation of inexperienced gamblers who get much of their gambling entertainment and action online. Sports betting, especially, is bringing in many new gamblers who have no experience in dealing with the tax issues connected with gambling. Also, because of the recent jump in the standard deduction, many long-time gamblers who used to deduct their losses by itemizing and thus reduce the impact of their wins find that this is no longer a smart tax move and are looking at the possibility of filing as a professional.

So in this blog I want to discuss a few of the questions I’m hearing to give some basic tax information that both new and experienced gamblers may need to keep out of trouble with the IRS.

One note:  My answers here obviously need to be brief. To get more details, check for the expanded answers in Tax Help for Gamblers. I will help you find those by giving chapter references.

Q: I don’t have to report my gambling wins if I have just a few and most are very small, do I? I lose most of the time.

A: Yes, all of them, including online gambling. Read Chapter 1.

Q:  But most people don’t do that unless they get some paperwork from a casino, right?

A: You’re probably right, but my job is to give you the government rules and regulations.  If you don’t follow them, it’s your problem if you have to deal with the IRS, not mine.

Q: I don’t keep a very detailed  record of my gambling results, but if I were audited, I could get a win-loss statement from the casinos and that would satisfy the IRS?

A: No, no, no! The win-loss statement would be very very unlikely to satisfy an auditor. It takes much much more paperwork. It took me 10 pages to cover this subject in Chapter 2!

Q: I play in casinos a lot and I get lots of W2-Gs. Would you suggest I file as a professional gambler?

A:  Oh, dear. I dread this question and I get so many of them. Although Brad and I filed this way for umpteen years and I continue to do so, I cannot give a definitive answer to anyone asking my advice about it. The long Chapter 4, “The Recreational vs. Professional Gambler,” tackles the question from every angle, with a helpful list of nine factors that can be considered. The more of these factors you can claim and the strength of each will help determine whether you’re conducting a real business and not just a hobby. Many court cases have put more – or less – importance on each of these basic components. However, over and over again, courts have ruled on individual taxpayer’s situations, using the age-old legal guide for evaluation according to the facts and circumstances of the case. It’s not an easy decision and most would want to consult a tax preparer who is experienced dealing with gambling issues.

Q: If I hit a slot machine jackpot over $1,200, I know I’ll get a W2-G, but will the casino automatically withhold federal tax?

A:  Not if you’re a U.S citizen, present proper ID, and give your Social Security number.  However, you can request (before any paperwork is started) any amount to be withheld for federal taxes, perhaps a good ploy to avoid filing required tax withholding. Chapter 5, “Federal Government Issues,” covers all the details – and the special situations and exceptions – for W-2Gs and other special government-required forms, tax withholding, Social Security numbers, and gambling issues for non-U.S. citizens. You may – or may not – be surprised how much Big Brother is watching your gambling!

Q: I played more live and online poker this year rather than video poker previously. I knew the tax rules I had to follow for machine play, but are they the same for poker?

A:  I wrote Chapter 6, “Tax Help for the Poker Player,” for players just like you. Some of the basic concepts are the same or similar, but there are many special circumstances. I cover these special rules about recordkeeping, casino paperwork, tournament play, group play, and recreational vs. professional play.

Q: I live in a state that doesn’t have a state income tax, but I’m planning to take a long road trip around the country visiting and playing in casinos wherever I find them.  Hopefully, I’ll get lucky and hit some good-size jackpots, but I hear that in some places, they will take state taxes out automatically. Is this going to involve a lot of paperwork?

A: I’m afraid you aren’t going to like this answer. Not only might you get hit with more paperwork, but in some states, you might face automatic state withholding that you can’t get refunded even if you file that state return. Before you plan your trip itinerary, you might want to read Chapter 9, “How All 50 States Handle Gambling Wins/Losses.”

Other topics my co-authors and I cover not mentioned above: lottery play, tournaments, comps, free play, gambling sessions, fantasy sports, cryptocurrencies, tax audits, and much more.

Finally, if this post sounds too much like an ad for my book, well, the $20 or so you spend on learning the ropes when it comes to gambling and taxes will more than pay for itself in correct information on the subject that you can’t get anywhere else at any price. I learned that early in our casino adventure when I had to research the information to give to our foreign-to-gambling accountant . That’s why I had to write it to help others with information on  avoiding costly mistakes. In fact, many gamblers down through the years have given this tax book to their tax preparer!

A Few Words about the “New” Video

A Few Words about the “New” Video

I’m pausing my book-report series to address a subject that is causing some heated discussion online: a video that has popped up on YouTube, one in which I was interviewed by Steve Bourie.

The first problem is that many viewers didn’t read the explanation that came with that video, that it was an edited re-post from 2016. Steve has re-posted some of his older videos, since he has a new American Casino Guide website.

Many of you have been following Brad’s and my 39-year casino adventure for a long time, have seen this video before, and know many of the stories of our journey. Many of you are also long-time video poker advantage players, having been on the same path and dealing with the same problems I talked about in 2016. And you know that it has been a steady decline since that time, especially exacerbated by the pandemic.

To those who point out that what we did back then is impossible these days, I agree. However, many of the techniques I talked about in this video are still valuable for casino visitors today. Casino gambling has never stayed the same. However, most players have always entered the casino with the same unchanging goals: stretching their bankroll so they have longer fun time and, if they can’t always win, losing as little as possible.

I’m reading all the comments from those who watched this rerun from 2016 and there are an amazing number of them, way over 270 the last time I checked. I ignore all the negative rants, but many have posted thoughtful comments and honest questions that deserve an answer. I especially enjoyed hearing about the positive experiences of those who have been traveling with Brad and me on this path of wise gambling, validating the facts that this was something that could be and was done by many players back in the time period I described in the video. It always warms my heart to hear when my words have helped someone have a better casino experience. (I think this is the main reason why I keep putting off retirement! 😊)

First, some answers to technical questions. The white car we won at the Stardust was a Mercury Mystique. (Actually, we didn’t need a new car at the time, so we sold it back to the dealer.) And yes, you do need to take into consideration the tax implications of gambling. Once we started serious play, we filed as a business and that allowed us to deduct our losses and expenses and pay taxes only on the net win. Recreational players have never been able to do that and recent tax changes have made that even a more severe hindrance for many. The book Tax Help for Gamblers will help you navigate those treacherous IRS waters.

A couple of updating items. I actually didn’t revise the first two Frugal books, as I mentioned I’d do at the end of the video. I soon realized when I started that project that there were just too many changes in the casino environment, so I had to write a whole new book. In The Frugal Gambler Casino Guide, I suggested new paths for the wise gambler. Also, I no longer have my own website, but I am still continuing to look for helpful information to put in this blog.

Perhaps for some people the biggest problem with the video is that they misunderstood that flashy title, “How She Made a Million Dollars Gambling in Casinos!” That “million” did not happen on one lucky trip to Las Vegas. In 2016, we’d been playing in casinos for over 30 years, living in Vegas for the last 16 of them. Yes, we hit some big jackpots; anyone who plays a lot will have some lucky hits. But I was careful to explain that we also had to suffer through many long losing streaks. Almost all successful gamblers will talk about “grinding out a win,” sticking with the best mathematical plays through thick and thin, whether you’re winning or losing.

Some wondered whether Brad and I are still playing video poker or did we go broke. We rarely visit casinos anymore, because we moved from Las Vegas in 2020 when Brad’s physical and mental health was declining, and there are no casinos nearby where we live in Georgia. But not only did we not go broke, thankfully we remained financially frugal during all the years of our casino life and now our gambling winnings help support our stay in a lovely senior-living home.

We’re planning to go to Harrah’s Cherokee the weekend of March 24. And that answers one last question from a video viewer. “Are they dead?”

New Year, New Updates

New Year, New Updates

I did plan to take a blog break over the holiday season, but I didn’t think it would end up being so long.

In the photo below of our family’s Buffalo-plaid Christmas celebration, you won’t see the intruder that disrupted our lives the following two weeks. It’s invisible!

Yes, unbeknownst to us, COVID was there and it attacked every adult who hadn’t been infected previously, despite all of us being fully vaccinated. Brad and I are just finishing our 10-day isolation period. He had no symptoms, but I got hit pretty hard and am still battling residue upper respiratory infections and bronchitis.

But no matter how bad I feel, I still “rest” a lot at my desk chair. And my computer keeps me connected to the outside world, including important casino news that may affect many of readers here.

TAXES

First, a lot of you are beginning to work on your 2021 tax returns and wondering if the 4th edition (eBook) of Tax Help for Gamblers will still be a good resource. There was no major federal legislation last year that required updates. The IRS clarified some cybercurrency regulations, so anyone with concerns about crypto should check with a tax professional. A change in one state’s law will make some taxpayers happy: Michigan residents can now claim a state-income-tax deduction for gambling losses they claim on their federal tax return. The law is effective for the 2021 tax year and beyond.

RESOURCES

Sadly, with the death of Darryl McEwen, we’ve lost “Seven Stars Insider,” the valuable resource for CZR players. However, I’m hoping that more VP players will join or re-join and participate more at vpFREE, which had to move to another site. (Subscribe at their new home.) We all need to help our fellow players by sharing information about VP conditions wherever we play. And vpFREE2 is still actively providing information about where the most generous games can be found, players club data, and other details from casinos all over the country.

Scot Krause still maintains the valuable Players Club Bonus Points list here on this website. He also continues to provide information on good casino promotions in “Vegas Values” on the American Casino Guide website, but now with a new once-a-month format on the second Sunday of each month beginning on January 9. The ongoing promotions page will be updated throughout the year.

Mark’s Las Vegas covers Vegas news and sometimes gives updated information about the MGM players club. Recently he posted that they were extending the Tier Credit-earning period for 2022 status by 31 days. They will count any Tier Credits earned in January 2022 toward both 2022 and 2023 status.

MGM

Speaking of MGM, I’m seeing a lot of online chatter about major changes in the players club at MGM properties and there seems to be utter confusion about what’s new and when and where the changes will come. Evidently, some changes started in November and some will be coming February 1. I haven’t played at a MGM property for many years, so I don’t have the experience to know the impact of these changes, and unfortunately, their website gives conflicting and often incomplete information.

Here are some of the details I’ve heard from experienced MGM players and internet sources, with some good news, but more disappointing downgrades. The new player loyalty system, now called MGM Rewards, will be universal at all properties instead of differing from those in Las Vegas and other regional areas. The five tier levels remain the same: Sapphire, Pearl, Gold, Platinum and NOIR, with only the threshold for reaching Pearl reduced.  Tier credits for non-gaming spend (food, lodging, etc.) have been drastically reduced. Players in the company’s sports betting and igaming system, BetMGM, can now earn rewards and tier credits.

There are too many changes for me to cover here, so I’ll give you several links that will keep you busy for many hours of study. Don’t forget to check the Q+A’s sections, which sometimes explain things more in detail.

The change that will hit video poker players the hardest is this phrase that appears over and over again: “Adjusting the way we calculate, basing it on your time played, average bet amount, and GAME TYPE.  (Caps are my emphasis!)

https://www.mgmresorts.com/en/mgm-rewards-is-coming-countdown.html

https://www.mgmresorts.com/en/mlife-rewards-program/point-calculation-change.html

https://www.mgmresorts.com/en/mlife-rewards-program/loyalty-program-changes.html

For those who coordinate with the Hyatt loyalty program, you’ll find more change info here.

FINAL GROAN

Whenever I see a casino wax eloquent about their new players club:

When we set out to reimagine our rewards program, we listened to your feedback and we did it to give you more …

To reward you appropriately we are adjusting …

We’ve completely reinvented the opportunities to reward you by …

I’m never excited … just sad!

More Q+A and This and That

Q:  In all the writing you have done over the years, I never heard you refer to Las Vegas as “Sin City.”  Why not?

A: I dislike judgmental nicknames for anything – people, places, ideas. Almost all of these negative names are either a putdown or referring to a minority number of people.  Gambling used to be considered a “sin” by the majority of Americans, but that has slowly been changing with the spread of casinos around the country. Now a wide majority of the population consider it an acceptable form of entertainment. Despite slogans like “What happens in Vegas stays in Vegas,” I don’t believe most visitors  lower their moral standards when they hit the city limits. They can do just as much “sinning” back at home if they want to. And I never saw fewer moral standards in the locals than you would see in any community.

No, I’m not promoting a return to a more family-friendly environment.  It’s all right to consider it primarily a good adult vacation spot. But it’s time to drop the “Sin City” label!  Let’s call it “Fun City.”

—

I have been repeating for years that I can’t answer most tax questions because most answers depend on individual tax and financial details. However sometime a question is general enough and is specifically addressed fairly clearly by the IRS. Here is one of those, with the answer taken from Tax Help for Gamblers that included some text from IRS publications:

Q:  I have a question about table game progressives. When you hit one, do they treat the win the same as a slot progressive and tax you immediately?

A:  The most common W2-G situation and the one with which most casino gamblers are familiar is when someone hits a jackpot on a machine (slot or video poker) that is $1200 or more.  However, most players don’t know that there are different rules for when a W-2G must be issued, depending on the form of gambling.

W2-G’s are rarely issued to table-game players.  They would only receive one if it was for a single winning table-game bet if both of the following apply:

1. The payout is $600 or more and

2. The winnings are paid at 300-to-1 (or higher).

This usually happens only when a game has a progressive or big bonus feature, like progressives on Caribbean Stud and Fortune Pai Gow and some bonus bets on Let It Ride.

Of course, I always need to add that all gambling wins are required to be reported to the IRS whether you get any paperwork or not!

 

Q:  I have a climate question. Having lived in IN, NV, and now GA, which do you prefer?

A:  Part of that question is easy to answer. One of the big factors, out of many, for our move from Indianapolis to Las Vegas was our desire to leave the cold winters in the north. Moving to GA had to do with health concerns and being with family, so climate wasn’t a factor. However, I sometimes do tire of Georgia rain and humidity and miss the dry desert air, even when it was fiery hot.

 

Q:  Where did you get the matching sleepwear your family was wearing in the Christmas photos, especially the dinosaur tops?

A:  My Amazon-crazy daughter buys “everything” online and she said she bought them in several places, but she thinks the guy tops were from the Children Place – though they’re probably out of stock now.

—

I would like to recommend what I found to be a very interesting and well-done interview on the podcast “Risk of Ruin.” Called “Two Hustlers,” Mickey Crimm and Bob Dancer shared some of the fascinating information about their early days of advantage play, taking widely different paths but both achieving great gambling success.

Finally, you might want to be sure to tune into my next blog. I have some possibly surprising news for you all. Actually, I have actually surprised myself with it. Have to wait to see how the pandemic restrictions are going …

Taxes and Shots = Pain

Taxes and Shots = Pain

First, let’s  talk  taxes. Many of you are probably doing the same thing I’m doing now, gathering up paperwork so you – or your accountant – can start working on your 2020 tax returns. I still get some questions about how to handle gambling figures, but I will give this reminder: I can’t answer most of them, because this would involve knowing your total financial picture. Tax issues are so complex that there are almost no short one-fits-all answers.

I can suggest reading Tax Help for Gamblers and/or checking with a professional tax preparer who is knowledgeable about gambling issues. And if you don’t know one, I would highly recommend Russell Fox, who helped big time to make the most recent (fourth) edition of this tax book very up to date, adding valuable details about new problem areas like virtual currency and fantasy sports. And here is a bit of information about Russ you might not know, thanks to a reader who left this note in the Comments: “In addition to being a tax guru, Russ is one helluva poker player. I’ve known Russ for many years. He is one of the organizers of BARGE, an annual Las Vegas gathering of poker players, mostly amateurs, although some noted pros have attended and/or come from our ranks.”

Last year’s edition of the tax book will still be helpful for 2020 return preparation.  However, one recent clarification, which was foreshadowed in that book, has to do with the IRS treatment of the taxation of fantasy sports.  You can read about that in my December 12th blog.

And if you’re dabbling in that big gamble of virtual currency, you might be interested in an article with the scary title: “IRS is ‘setting the trap’ for bitcoin and virtual currency investors on 2020 tax form.”

—

Someone asked a question about the IRS letter-audit problem I mentioned in that same Dec.12th blog.  The 1099-Q sent by the 529 Plan I had for my grandchildren’s education had a total gross-distribution number, which was the total of the basis (money we originally invested), plus the earnings. The IRS wanted tax on the earnings. All I had to do  was inform them that this was all used for qualified educational expenses. They’d never questioned this in years past; why this year? I’d been surprised that they never asked for “proof” of our expenditures, but they didn’t. By the way, this was the best “investment” we ever made! Zachary got his BS; Kaity got her BS and Master’s – and there’s money left over for the greats!

—

Yes, Brad and I got our 2nd COVID vaccine shots. Although a few in our building felt lousy for a day or two, most had few or no side effects. I had only a sore arm, just like after a flu shot. Brad was fine; minutes after, he’d forgotten he even got the shot, the only benefit of short-term memory loss. And yes, you might recognize that person behind Brad, someone who decided to celebrate vaccine protection by becoming a gold-streaked redhead!

Several sharp-eyed friends on Facebook noticed Brad’s shirt was from the Cannery. Yes, he still has some casino logo clothes including a few nice jackets. But none of those satin beauties from the Westward Ho. Wish I had saved at least one!

Looking Backward and Forward

Looking Backward and Forward

I haven’t forgotten the promise to give you my solution to the Christmas game in my last blog. But I was surprised that I received so many “guesses” and they’re still coming in, many many different takes. So I’ll compile them and report in my next blog.

In the meantime, a new year always inspires reflection and never more so than the passing of 2020 into 2021. Here is one I penned (typed?) for one of the many “projects” here in our senior community.

2020 – The Year Hugging Disappeared

There are a lot of things I have missed during this COVID-19 pandemic:

  • Big family reunions
  • Sit-down meal choices in restaurants all over town
  • The ability to see people’s faces to see if they’re smiling at me
  • Being able to see my regular doctor in person when I need him/her to diagnose why I’m sick
  • Visits to a friend’s home
  • Trying on clothes in a store
  • Feeling safe to fly to a vacation destination
  • Going to a salon and getting my hair and nails done

But most of all, I missed hugs:

  • When meeting an old friend
  • When introduced to a new friend-to-be
  • When someone does something nice for me
  • When seeing a long-absent relative
  • But most of all, when my three little great-grandchildren were warned that they couldn’t rush in and give me even their usual tight-squeeze “leg hugs.”

But I’m cautiously optimistic for 2021 — although not so much on the gambling front.  Anthony Curtis, in a recent QOD, quoted a Station executive as saying, when refusing to no longer be part of the LVA’s Member Rewards program, they’re “not giving anything away anymore.” And players are reporting from all over, but especially in Vegas, that promotions and customer benefits are being drastically cut. It’s hard to understand this phenomenon. Most of us had thought that the casinos would up the benefits to lure customers back when the pandemic restrictions were lessened.

Maybe in 2022?

There is one positive note for gamblers, although it’s accompanied by a big IF.  The American Gaming Association, the lobbying group for casinos and gambling in general, is optimistic about the prospect of the IRS raising the threshold for slot payouts, saying that it is “better than ever.” You can read about it here. However, I tell you that I’m not putting any money down on this maybe proposition. I would never bet on any IRS issue!

I do plan to stay hopeful about life in the future. Here is another short submission I wrote for the Legacy Reserve, our senior home, to be put in a buried time capsule.

                     End of 2020 – Start of 2021

Not enough negative adjectives in the English language to describe 2020: so much deadly racial violence, so much political nastiness, so much loneliness while trying to avoid the suffering and death from COVID-19.

But I am a little more optimistic for 2021. The COVID vaccine should bring down the hospitalizations and death toll and I am encouraging everyone with whom I come in contact to trust the scientists and get the vaccine as soon as it is available to them.  And until the pandemic is truly over, I will continue to take the advice of health authorities and follow their recommendations, including wearing a mask to protect myself and others.

I am cautiously hopeful for 2021.  Hope that new government leadership will be able to bring ALL Americans a little closer together, no matter the differences in ethnic or racial backgrounds, sexual orientation, gender identity, religious beliefs, cultural mores – and yes, even political views.

I want to do better myself in being more tolerant and showing more love. The spreading of more human love may be the biggest need to make 2021 better than 2020.

Taxing Issues for Gamblers

Taxing Issues for Gamblers

I just got a nice letter from the IRS saying no, I didn’t really owe the $6,122 that on Feb. 24 they had said I did after they looked at my 2018 return.  Thank you, IRS,  for the early Christmas present!

For once, this was not a gambling issue about which I had to “educate” them, as I have had to do so many years in the past. This time I had to explain to them their own rules about taking money out of a 529 for granddaughter Kaitlynn’s last year in her master’s program.  But I used my experience as a teacher of high school slow learners, wrote a simple but not aggressive letter — using no big words — to explain why their own tax codes did not support their position.  It took almost 9 months, but some human finally read my letter and decided that I was right. Another victory in my column!

But this got me thinking that tax season will be coming up before we know it, and we will have to deal with it in spite of election turmoil and a pandemic taking much of our brain space. 2020 will be a strange year for Brad and me taxwise, the first time in 30+ years that we won’t be working with gambling figures.  But many of you will have to deal with them, and I want to steer you to some resources that might help you with possible thorny tax problems.

Russell Fox, a super knowledgeable tax preparer I highly recommend and a major contributor to the last edition of my Tax Help for Gamblers, writes a very useful blog for gamblers, “Taxable Talk,” tackling the perplexing issues you might face when dealing with the IRS. Recently he discussed in detail the new IRS memorandum dealing with the question of whether Daily Fantasy Sports is gambling, a subject that had been a gray area and subject to personal and profession interpretation since its inception.

Also, I recommend  a helpful article by Russ called “GAMBLING AND TAX GOTCHAS.”   This is an extremely good review of possible tax trouble spots for any gambler, some of which you might not be aware since they are new for 2020.  You also might find it helpful to go to Russell’s home page and start browsing – he has great information and money-saving tax advice not just for your gambling issues but for all parts of your financial life.  And you might like to check out the recent “Gambling with an Edge” podcast, where Russ answers many questions that listeners have asked.

 

35 Years of Advantage Play – Part 18 – Q+A

Your questions keep pouring in!

Q: When you said that your winnings had reached $1.6 million, did you mean gross collections without losses having been deducted, or did you mean net profit? The two different figures could be VERY different!

A:  Very different indeed!  And I probably shouldn’t have used the word “winnings.”  I have heard so many people talk about their “lucky” friends who always came back from  Vegas with “big wins.”  In 99.9% cases, those visitors were bragging about their big “jackpots” but never go on to say whether they brought home any of that jackpot money.  It is not so exciting to talk about all the losing sessions.

That figure I gave is NET win, that is – profits.  Whenever I talk about big individual jackpots, I try to always balance that with details about losing sessions.  Big jackpots are thrilling to experience, but all advantage players know that long-term successful gambling is a grind.  Video poker players know that they will suffer many losing sessions between those exciting jackpots.

Related to this question is one that asks whether we counted the value of comps in our cumulative profit number.

For the first years of our casino vacations, we would count comps in our calculations as a way to stretch our entertainment budget.  However, as we were spending more time in Vegas and in other casino venues and were also playing video poker at higher denominations, we were earning more comps than we could have afforded with our regular modest financial situation.   So that was the time we stopped adding the value of comps.  We would choose plays that had an EV (theoretical expected value) of over 100% on the play itself.  Any comps would be “gravy.”

Other related questions on this topic of gambling profit had to do with what we counted in our “Win” column.  Obviously, that included cash that came directly from winning on a casino game.  But there were other profit sources:  A big one was cash – or more frequently freeplay – that came from players club benefits and the casino marketing department.  Especially in the later years, when good games were being removed and paytables were being downgraded, these cash/free play offers were the only thing that could put the mostly negative games into positive territory.  Plus, promotions were always a major profit source, like multiple-point days, tournaments, and drawings. Couponing, especially in the early days, was almost always a good way to add some plus numbers in the “Win” column.

Some items that might have seemed to be in the comp category – and not counted as “winnings” – I sometimes did add as gambling profits.  We earned a lot of gift cards in various casino promotions over the years.  If we used them for purchases that we would make anyway – for example in stores that sold groceries, gas, electronics, clothing – I viewed them as cash-equivalents and therefore gambling profits.  Sometimes I would end up with cards we just couldn’t use – in the last years we were not in the accumulating-stuff stage – but we had children and grandchildren that never saw a gift card they couldn’t take off our hands!

So, checking our detailed records I kept the last 23 years of casino advantage play –   a winding path with lots of twists and turns, a few glorious mountaintop points, and many slogs through valleys – I see that we averaged a profit of about 62k a year, even though we never put in regular  40-hour weeks.  Although we treated our casino play as a business so we could enjoy a profit, it was definitely a part-time retirement endeavor.

This brings up another question:  What about IRS issues???

Once we began playing at higher levels, we started filing as a business, establishing a S Corp which included both gambling income and my gaming writing.  After a few years we disbanded the S Corp – too many state and accountant fees – and went to the simpler Schedule C.

Yes, I had to “fight” the IRS in several years, but I pretended they were like the slow learners I had in my early teaching career.  So, I would write/talk patiently – in simple terms – how gambling could be a legitimate business.  I was always able to convince them – albeit with a lot of time-consuming paperwork and long phone calls – before it was ever needed to go to tax court.

I can’t answer most tax questions that gamblers send me because the subject is so complex and depends entirely on individual circumstances.  I would refer you to the most detailed and up-to-date resource you can find on the market today, the book Tax Help for Gamblers. I brought on board Russell Fox for this last edition (the fourth – in paperback and online ) to add his expertise in explaining all the new developments, particularly in the exploding area of sports betting and the major changes in new tax legislation.

Early on in our casino adventure our goal was just to break even and enjoy the comps.   We actually surprised ourselves by making money on such a fun activity.   I guess you might say we overshot our goal.

35 Years of Advantage Play – Part 16

Last week we took the short walk on the last leg of our 35-year journey down the winding path of advantage play and now we can look back at the big picture.  I had been writing – yea, preaching – for 20+ years about the importance of looking at casino play through the lens of the “long term.”  Now I can talk about it not just as a theory or a computer analysis but as a concept that Brad and I confirmed in our personal experience.

As I have detailed in these last 15 blog entries, advantage play was not a smooth level road, but more like an endless rollercoaster ride.  For the first 13 years, ‘85-‘96, casino play did not make up a major part of our time.  At first Brad had a full-time job, and even after he retired we were “vacation casino visitors.”  But we were studying hard all during this time, first at blackjack and then video poker.  We were learning to use the comp system to the max and this allowed us to eventually “do the casino life” for little or nothing out of our own pockets.

By 1997, we were in Las Vegas most of the year, finally moving there permanently in 2001.  This allowed us to take advantage of the ongoing casino benefits available to a regular local player.  Coupled with many out-of-town casino opportunities, our long-term winnings grew to over 1.6 million by the end of 2018.

This was not to say we didn’t have any losing streaks, and some were painfully long, lasting a whole year in 2002 and 2015.  Perhaps 2019 was the most disappointing since we knew it was going to be our last year doing battle with the casino edge.  It is natural to want to “go out with a bang.”  However, we realized that we were playing with a very thin edge and were suffering a royal drought and it might take us longer to get to that “long term,” and we weren’t going to have any extra time another year.  In fact, medical problems were already majorly decreasing our casino time those last 6 months in 2019.  So, we ended the year with a loss.  However, comparing that small number with our large cumulative winnings, it was just a small red blip on our computer screen’s sea of black.  We had proven the validity of that “magical long term.”

I was figuring that 16 weeks was about long enough to reminisce and give the final “financial report” of our 35 years of casino play.  So – this was going to be my final autobiographical blog.  But so many of you have been sending me questions or requesting more specific details about some of the subjects I have been discussing. Therefore, I will continue blogging here as long as I feel that giving answers or expanding on some subjects may be helpful information for those of you who are still wanting to enjoy the entertainment casinos provide but at the lowest possible expense.

Here are some of your questions I already have collected in my notes:

  1. How many royals did you and Brad have? Which of you had the most?  Which were the most exciting?
  2. What do you think are the most important factors contributing to your success? Do you think you all were just extra lucky?
  3. What were your most exciting jackpots?
  4. Didn’t you get a lot of extra comps because you had hosts who were friends?
  5. Did you ever ever play when you didn’t have an edge over the casino?
  6. I never hear about you and Brad drinking alcohol. Are you teetotalers?
  7. I know you filed taxes as a business. Did you ever get audited?
  8. Do you and Brad miss casino life now that you are retired in GA?
  9. Can I use any techniques you used in the past during my visit to casinos during the pandemic?

You can put your questions in the “Comments” here, on my Jean Scott Facebook page, or in a personal email at [email protected].

1 of 6
123456