The IRS and U
Your winnings are taxable but only after you subtract your losses, which is the only reason why anyone would keep track of their losses. Like others have said here, it would be pretty stupid to include gambling winnings on your tax return, if the money won was won illegally. Any winnings from offshore books are not going to be reported. Think about it, why would any offshore or local book ever inform the IRS here that someone won, from their illegal operation.
Vegas and all Racetracks have to report any single payout of more than $5,000 and you have to sign a form before you get paid. Now think about this. What would you do if you had some big winnings at the racetrack but the same year, lost more than those winnings betting with a local or offshore. You would pay the tax on your winnings and never mention your sport betting losses.
Will our government ever figure out that big offshore books keep all their winnings and do not pay tax on any of it. Think of the money that could be taxed here, if just sports betting was made legal. I remember back when the state of Delaware ran a football card operation but I don't remember why they stopped.
