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Casual Recreational Gambler Who Maintains Gambling Session Records

Chief Counsel Advice Memorandum (CCAM 2008-011) introduced the concept of “gambling sessions”. The CCAM, provided the following analysis:

  • It noted that Code Sec. 165(d) uses the words “gains” and “losses” from wagering transactions without ascribing a technical meaning to the terms. In ordinary parlance, it notes that a wagering “gain” means the amount won in excess of the amount bet (basis). The term wagering “loss” means the amount of the wager (basis) lost.
  • Does transaction mean each single play or a series of plays? The wording of Sec 165(d) uses the plural form “transactions” and Courts considering that reading have found it unduly burdensome and unreasonable to require record keeping for each individual wager (Green, 66 TC 538 (1976); Szkirscak, TC Memo 1980-129).

Thus, the CCAM develops a bright-line test. The taxpayer’s “accession to wealth” (i.e., wagering gain or loss) is determined when the taxpayer stops gambling, and the CCAM came up with the concept of gambling sessions. The following examples of gambling sessions are used in the CCAM:

Example - A casual gambler who enters a casino with $100 and redeems his or her tokens for $300 after playing the slot machines has a wagering gain of $200 ($300 - $100). This is true even though the taxpayer may have had $1,000 in winning spins and $700 in losing spins during the course of play.

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Example - A casual gambler who enters a casino with $100 and loses the entire amount after playing the slot machines has a wagering loss of $100, even though he may have had winning spins of $1,000 and losing spins of $1,100 during the course of play.

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Gambling Session

A gambling session is very limited in scope. It must be the same type of uninterrupted wagering during a specific uninterrupted period at a specific location.  Thus, if a taxpayer entered a casino and played slots for an hour, and then switched to craps for the next hour, that would be two separate gambling sessions.  If a taxpayer entered Casino #1 and played slots for an hour and then went to Casino #2 and continued to play slots, that would be two separate gambling activities since two locations were involved. 

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