For this question, ignore what's "fair".
Laws are laws, and they may or may not be fair, depending on who's making the judgment.
I THINK we (on this list) understand that all gambling income is reportable, not just that income which generates a W2G, and that losses are deductible up to the amount of winnings.
That said, and ignoring the very small minority of taxpayers who file as professional gamblers, who do you think "wins" - do you think that the IRS collects more from gamblers than it ought to (under the law), or do you think that gamblers try to cheat and hide gambling income from the IRS in a greater amount of lost tax than the IRS over-collects.
While I understand that most gamblers are losers, and that may skew the above question against gamblers to an extent that can't be countered by cheating winners, I sure do see an awful lot of people who think that if you win but don't get a W2G, you don't owe taxes on the winnings, and of all those small-time gamblers who never get a W2G, while the losers undoubtedly outnumber the winners, I expect that almost NONE of them report ANY gambling activity, wins or losses, in the absence of that W2G.
I'm speculating that most of the gambling activity in the US doesn't generate W2G wins; I see so many penny and nickel players who never hit a jackpot. Even if 80% of them lose every year, and 20% win, the losers who don't report their activity won't cost the IRS a penny, while the winners who don't report it will cost the IRS.
And of course, while it makes no sense, it's illegal not to report the income and losses, even if they result in no tax due.
--BG
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