I'm thinking about the cost of becoming a Harrah's 7*, as far as payment of state taxes on the gain from playing coin in of $1Mill, assuming that winning sessions were considered to be income, and losing sessions could not be used to write off winning sessions. Also assuming that all winning sessions are reported, not just sessions resulting in a W2G.
It seems that there must be certain games that would be better to play than others, even given the same return. For example, 100% return would mean break-even over the long run. But, if you have to pay state taxes on any winning session, you'd be financially better off playing a game that is most likely to break even on each session, than playing a 100% return game that wins really big 1 out of 8 sessions, and loses an equal amount over 7 of the 8 sessions. In the former, there would be no state tax to be paid, but in the latter you'd have to pay state tax on that really big win, even though you only broke-even in the long run.
I also wonder how the number of sessions played works into the calculation.
For example:
Gambler A plays dollar video poker, playing $5000 per session, 2 sessions per each day of gambling, for a total of $1,000,000 coin-in for the calendar year, resulting in a total of 200 gambling sessions in the calendar year.
Gambler B plays dollar video poker, but takes more breaks, playing $2500 per session, 4 sessions per each day of gambling, for the same total of $1,000,000 coin-in for the calendar year, resulting in a total of 400 gambling sessions in the calendar year for gambler B.
Both Gambler A and Gambler B both play the same game, with the same volatility, and the same expected return: 100% Pick'em Poker. (Just to make it simple, assume it is 100%).
My questions:
1) Is there a way to calculate the expected state taxable income, based upon the type of game played, and amount of coin-in put through;
2)Does it make a difference as to how many sessions are played when making this calculation?
