Ever since the “Big Beautiful Bill” was signed into law in July, and Russel Fox appeared on Gambling with an Edge explaining that I’d have to pay income tax on 10% of my W-2Gs whether I won or lost during the year, I knew I’d have to quit gambling come January 1, 2026.
I received more than $6 million in W-2Gs both this year and last. In 2025, I made money but would be minus after this extra tax. In 2024, I lost quite a bit of money gambling and would still have this big tax bite under the new law. No thanks.
Since July, I’ve at least mentioned this in numerous blogs, so this decision is no surprise to any of my regular readers.
While I was in Cherokee in early December this year, my gambling partner was a fly-on-the-wall during a Zoom call with Gary Kondler, who works for the Kondler and Associates CPA firm, which specializes in taxes for gamblers. It is Kondler’s belief that if gamblers use the session method of itemizing their wins and losses, mentioned in Shollenberger vs Commissioner, the BBB tax bill isn’t such a big deal. Yes, the tax bite will increase — but not outrageously so. Your W-2Gs, whose total must still be listed on your tax form, are not relevant in how much you have to pay.
Tell me more!
This is something I want very much to be true — and there are a variety of proverbs that warn you to be very careful if something seems too good to be true. I tried to do as much “due diligence” as I could.
It turns out that Gary’s father, Ray Kondler, was a guest on Gambling with an Edge in 2013. This was when GWAE was an hour-long radio show on Thursday nights rather than a podcast, but you can still listen to this show on YouTube by searching for “Ray Kondler.” While this show ran twelve years before the BBB tax bill, when I listened to it recently, Kondler impressed me and I came to the conclusion that I would like his firm to represent me.
Also on YouTube, when I searched for “Gary Kondler,” I found that he has appeared on several gambling related podcasts since the BBB came out, and I’m still convinced I want these guys representing me. You can listen to these podcasts as well if you like. My financial advisor has contacts with the Nevada Board of Accountancy and found out that the Kondler and Associates firm has a solid reputation. Richard Munchkin and I are interviewing him on GWAE the day this article is posted, and the podcast will probably be posted Wednesday December 24.
I’m convinced enough that I plan to hire the firm and continue my gambling career. I am not an expert in this field, and everybody’s tax situation is different. Keep in mind that I am making no recommendation for you or anybody else.
If I’m wrong on trusting Kondler’s methodology, continuing gambling could be a very expensive decision for me. It will be a few years before anybody knows for sure, because we’re taking about the 2026-and-beyond tax years and it takes a while after returns are filed to go through the system. And while the BBB is still the law today, who knows if it will be changed along the way?
I am willing to take that risk — for myself. Whether it’s correct for you to do similarly is something you’ll have to decide for yourself.
If you write emails to me, or post responses to this column, or ask me tax questions, my response will always be “I’m not a tax expert and I’m not qualified to answer your questions.”
This is not a question about tax law or how much taxes you have to pay. It is simply a question of what is “…the session method of itemizing their wins and losses…?” In other words, what is “the session method?” I have never heard of it.
I’m guessing it is just consolidating all your wins and losses by session. Hench, W2Gs wouldn’t be as big a deal. Bob might get 5 but lose $500 on the “session” for the day. In that case, it just goes into his log/records as a $500 loss.
There is really no way the Govt (as dumb as they often are) can just broadly say you owe 10% on your gross W2G’s. I’d think just about any good tax accountant/attorney could defeat that rather easily. JMO
How likely is it that the government might try to argue against “session” wins or losses and force a different legal constraint on the bookkeeping, such as “day” or “week.” “Hour” would certainly be onerous, but this is the federal government we’re talking about, so onerous is always a possibility.
Would that have any recognizable effects different from “session” bookkeeping?
This occurred to me because I’m a sports bettor and everything is kind of defined weekly as opposed to daily or “sessions.”
I’m unfamiliar with what is considered a “session.” “Sessions” seems like such an amorphous problematic word to use legally that I have to think it’s gotta be redefined sometime. I mean, what the hell is a “session?” Is it based on time, a working shift defined by whom, or a location, or an uninterrupted behavior? And if interruptions are allowed, how do you define those?
Sorry, just spit balling here. I find it strange that the feds want precise record-keeping, but haven’t to my knowledge precisely defined anything.
I’m just spit balling as well. But I get your point. Session seems so ridiculous. Let’s say a session is first session of the day in a VP game. 1pm-4pm. How in the hell would that be relevant if you play at 7pm-9pm again that day? And how would it be any different than just keeping a log for the entire month or year for that matter?
So, I too, would like to hear what they mean by a “session method?
I have been reporting using the Session Method since 2007. To my knowledge, the definition of a “Session” has not been clearly defined by the IRS… but common sense tells me that a period over 24hrs – or at more than one casino would not qualify. A “Session” for me starts when I enter a casino and ends when I leave the casino floor for the day. That’s how I track it and the IRS has accepted it.
See Gamb00ler’s post below – I’ve used that article as part of the backup for this methodology.
I was audited. Maybe 1995 or so. Here’s how it went in my case, for anyone interested.
I got a letter from the IRS that my tax return was “randomly selected” for auditing.
First, I felt sick. Not that I had cheated, but I had heard or read about a personal diary being necessary if one is audited. I had not done that.
The letter said mine was a “letter audit” only, meaning that I could submit my “evidence” by mail, not an in-person audit. And only for the portion pertaining to gambling win/loss, nothing about anything else on the return (all the other stuff if you itemize).
With the letter was a paper booklet explaining, among other things, a list of acceptable forms of “evidence” I could submit to support the correctness of my return. Among those, at the top of the list, was casino win/loss statements.
I know, I know, everybody says IRS doesn’t accept them as evidence, and those do contain a similar disclaimer, but that is what was listed in the material. I called my CPA who was gambling knowledgable; he said “just send in the win/loss statements, that will be enough.”
Other forms of evidence they would accept included losing lottery tickets, losing horse race tickets, losing keno tickets; a long list of all kinds of ‘evidence’, including what was termed at the time a “personal diary” of gambling. I reacall it saying that a personal diary should include dates/times/casino names and addresses/machine numbers/betting window numbers, etc.
And, heck, it wasn’t like I was any kind of big player. What a waste of IRS resources. But I digress.
A friend who was a horse racing gambler gave me a big wad of losing horserace tickets, several different tracks, many thousands of dollars worth of losses, that I could include in my submission of “evidence”.
I didn’t use them. Would the IRS track down and compare the data on the tickets with my dates at work, etc? Silly looking back at it.
So, I gathered all my casino win/loss statements and submitted them. That’s all. I had no personal diary.
I received a letter saying my evidence was “accepted”, my return was accepted as originally submitted. Something like that. Whew.
I’ve always wondered, how many IRS personnel would be needed to closely and accurately scrutinize every personally created (and how is that considered so much more honest??) diary by all US tax payers who do casino (and other) gambling and get audited, the dates/times/casinos/machine numbers/betting window numbers, horse race tickets, lottery tickets, and so on.
My accountant told me to quit gambling, even taking into account the raised W2G threshold. This year I have over $100K of W2G’s, and if I do that same thing in 2026, it’s a bigger loss on a losing proposition. She thinks the law will not be repealed. Too many tax cuts to pay for.
Lucky: That’s exactly where I was before I heard about Shollenberger vs Commissioner.
If you file in complete compliance with the revenue laws, the W-2G threshold has no impact on your taxable income. The threshold is only a ‘reporting’ regulation stipulating the casino’s obligation to document payments exceeding the threshold.
The session method used to be irrelevant to pros since the commutative property exists, but recreational gamblers have used it for a while, especially non itemizers. Itemizers generally have used the sum the W2G and subtract losses method. The IRS will be more likely to push out a CP 2000 because the sum of computer reported income will not match what is on the return. A lot of people want to avoid the CP 2000 as much as possible, but using the session method it is almost guaranteed. Of course if you are keeping records it won’t matter to you, other than an annoyance.
I maintain a fairly simple Excel spreadsheet, detailing date, location, game, money in, money out, and net result. When I go to Las Vegas, I write it all down during each day, and update my spreadsheet when I get home. It takes only a few minutes, and it tells me how I’m doing overall (this year, not so awful, not so good). If I hit the lottery for a big amount, or if I have even one W-2G, I have proof of my other results in case the IRS asks–and a lot of peace of mind.
After filing for many years as a professional gambler, some low level employee at the IRS didn’t like how my last tax return had been filed. I got the dreaded CP2000 because I reported that my total income from gambling was less than my total of W-2Gs. After a couple of letters back and forth, someone at the IRS said they were not going to let me file as a professional any longer. They also threatened to take me to Tax Court. In my last letter to them I included the document described below. Weeks later, while chasing a progressive JP I got a phone call from the IRS informing me that my last return was “accepted as filed”.
I no longer remember how I found this document, but it is interesting to those including gambling results on their tax filings:
https://www.irs.gov/pub/irs-counsel/am2008011.pdf
Did you get a letter from the IRS saying it was accepted as filed? I ask because the IRS does its business either via letter or via (blast from the past) fax. If you don’t have it in writing, you don’t have it.
Definitely log into your IRS account as all correspondence is now posted online, if the statute of limitations has expired you are probably in the clear.
This was quite a while ago now… I would guess about 2010. I was surprised that the IRS would call me. Perhaps they did so because I think the Court Tax date was only about a month away. The last letter I wrote them included details like: I had been filing as professional for 15 years already, in those years I had not received a single W-2 and little other income, I had paid tax every one of those years, I visited a casino about 800 times for the tax year in question, my gambling log (spreadsheet) that showed every W-2G.
I think they realized they would probably lose in Tax Court. I don’t recall receiving any letter verifying their decision… but that doesn’t mean it didn’t happen. Maybe since there was no change made to my filing a letter was not necessary.
This is also a good document; read the second paragraph on Page 2.
I have been filing using the session method since 2007 and the IRS has accepted it.
https://media.cadc.uscourts.gov/opinions/docs/2013/07/12-1058-1445657.pdf
The IRS can interpret “session” however they want because it’s not clearly defined. With the W‑2G threshold going up and deductions going down, they know people will try to avoid taxes. If you’re still relying on session-based reporting, be very careful.
This document from Michigan with a lot of citations is also helpful: https://www.michigan.gov/taxes/-/media/Project/Websites/treasury/RAB/2022/RAB-202222-Treatment-of-Gambling-Gains-Losses-Expenses.pdf?rev=11c8139449fd47159cd1e9de00f8492f&hash=21CA58EED12DD677DBEDAE663AE26C8D
If you have 10 sessions, 8 of which are $200 losses. 2 of the sessions are $500 winners. You lost $1600. You won $ 1000. A $600 loss in total. You show the total gain as $1000. With the new law, you can only deduct $800 of your losses against the win. How is the session different? You still have wins and losses. With the session method, do your wins go against your losses, so you can show a $600 loss and not show any gains at all on your return? If the numbers are greater, and you receive W2G’s, you have to show some of your wins, how do you deduct more than 90% of that.
Hypothetically, if you have 8 losing sessions where each one generates a $100K W‑2G and you actually lose $100.2K, that’s a $200 loss per session. But you still end up with $800K in W‑2Gs. If you don’t use session reporting, you’re stuck reporting the full $800K as gross winnings — which could leave you owing around $72K in taxes (90% rule) despite losing overall.
This is what I just responded above – With the W‑2G threshold going up and deductions going down, they know people will try to avoid taxes. If you’re still relying on session-based reporting, be very careful.
Lucky: I am not a tax advisor.
According to Kondler, your W2gs, while they have to be reported, are not reported as income. He recommends a daily session method for some gamblers — that is, if you play in five casinos in a day, some wins and some losses — only the daily total is reported. This will greatly reduce the sum of your wins and the sum of your losses — although the difference between them remains the same. there are other techniques to use. Contact him if you want more details.
Your example is not what any of us are worried about — you’ll owe a small amount of money. Those of us who get lots of W2gs — that’s where the real savings are. Those are not reported as income in Shollengberger vs Commissioner. Read it — or talk to Kondler.
Dear Bob: In virtually every blog you have posted since July 8, 2025, you have implied or stated that you will not be gambling effective January 1, 2026. Then, “…out of the blue…” a description you once used, you said that you are now going to gamble as usual. You referenced an IRS case, in 2009, “Shollenberger” as the reason. I read that case and it refers to a casual gambler, betting in 2005, who didn’t report a $2,000 jackpot, but it does use the $2,000 figure. I, too, am not a tax advisor or accountant, and it is really confusing except for the part where the IRS does not count the entire $2,000 as income. This resulted in a drastic and immediate change in your previous blogs that you are quitting gambling come 2026. Please look at the 13 comments, to date, and you will see much confusion and an implied wish that we readers would also like to save tax money as you apparently will do. Your 12/23/2025 blog doesn’t mention what “session” means, or even how the new 90% deduction rule caused this change for you which is based on one IRS decision, which was on a casual gambler, and one conversation with a gambling tax authority. I and all your regular readers would also like to save tax money, avoid scary IRS audits, etc. and would appreciate some further explanation, and your occasional readers would likely be impressed. You should use the usual disclaimer as you have in the past.
Henry: I am not a tax advisor.
Yes I know I spent 5 months saying I was quitting — and only found out about Gary Kondler in December — and it caused me to change my mind. It’s possible he won’t even use the session on me — there are other ways to do it. We will examine them all and choose the best one.
One thing is clear — your tax situation is different from mine. Things like state of residence, marital status, number and amount of W-2Gs, net profit or loss on the year, other sources of income, etc., are all important. I’m not positive now what Kondler is going to do with my own tax situation — let alone what he would do with yours.
If you’ve listened to the GWAE podcast and find him persuasive, maybe you can contact him. it’s up to you and i’m not advising you one way or the other.
I know you’d like easy-to-understand answers that will work in your particular case— but I don’t have any for you.
Bob, thanks for the new episode on taxes — very informative. A quick clarification though: you must report the full total of your W‑2Gs, period. Session-based win/loss isn’t reliable and can get you in trouble. For 2026, the best practice is to minimize your total W‑2G volume. Even if you expect big losses like some YouTubers claim, extremely high W‑2G totals — especially in the high seven or eight figures — can hurt you badly.
That is not how session accounting works. The total of W2-G’s are irrelevant. You will assuredly get a CP 2000 notice in the mail though and that may cause heartache and angst, although if you are keeping good records it shouldn’t be an issue.
The most surprising thing about this article and comments is that Bob Dancer didn’t know about the session method already! Especially since is documented in Jean Scott’s Tax book, first published a couple of years ago, which is sold here on the LVA, published by the same company that published most of Dancer’s books.
As far as some of the other comments saying that there is no guidance of how to determine a session, that is not true. The tax law case ruling from the judge lays out the (what I view as common sense) definition of a session. Play on a single day, at one casino, at the same game (not necessarily the same machine). I believe this is also what Jean’s Scott’s Tax book also states.