Under the Internal Revenue Code,  U.S. citizens must include on their tax returns and pay tax on all income, including all gambling income, earned worldwide from whatever source. Unlike the United Kingdom and many other countries, the United States taxes gambling income.
U.S. taxpayers, with the exception of some professional gamblers, are not allowed to ‘net’ their wins and losses (that is, combine them and report only the total), but must add up their total wins from each gambling session and report the total as income (part of ‘Other Income,’ line 21 of Form 1040.) Losses in any year may be claimed, but only up to the amount of winnings reported that year, and then only if the taxpayer elects to itemize deductions rather than taking the standard deduction. 
A taxpayer must determine winnings and losses separately. However, the Internal Revenue Code and supporting IRS precedent do not provide any specific guideline on when a gambling activity begins and ends in order to determine whether the particular activity resulted in a win or a loss. The purpose of this article is to examine what precedent there is. That is, what constitutes a session of a particular gambling activity?
IRS Publication 529 (Miscellaneous Deductions) provides general guidelines:
You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information.
1. The date and type of your specific wager or wagering activity.
2. The name and address or locations of the gambling establishment.
3. The names of other persons present with you at the gambling establishment.
4. The amount(s) you won or lost.
For specific wagering transactions, you can use the following items to support your winnings and losses….
Table games (twentyone, blackjack, craps, poker, baccarat, roulette, wheel of fortune, etc.): The number of the table at which you were playing….
Before we try to determine what constitutes a “session”, let’s take a brief look at documentation requirements for gamblers. You must keep a log (diary) of your results. Courts have held that the log should be a “…contemporaneous daily log” and that the records be permanent.
If you are audited you have the burden of proof of showing that you have maintained good records. “[T]he taxpayer should not be allowed to avoid paying income taxes simply because he keeps incomplete records.”
The simplest method to comply is a written log. You can use a small pocket paper notepad or diary and write down the date, cardroom name, game, table number(s), time you played (e.g. 1:00pm – 3:00pm), and your result (amount of win or loss). This is the method that the IRS suggests.
Alternatively, you can use a computer system. IRS Publication 552 describes the requirements for a computerized system: “If you use a computerized system, you must be able to produce legible records of the required information. In addition to the computerized records, you must keep proof of payment, receipts, and other documents to prove the amounts shown on your tax return.” Back-up records for tournaments are your tournament receipts. For live (cash) games, though, it’s just your word. The IRS likes written records because it believes they are less likely to be forged.
The final record-keeping requirement is that the data be entered contemporaneously. While there are no specific standards for gambling expenses, similar requirements exist for other types of expenses. For example, travel expenses must be entered “…at or near the time of the expenditure.” Thus, you should enter your results in your log daily, or as quickly after playing as possible. The burden of proof of records is on you, not the IRS.
The admonition to include the number of the table at which a game is played implies that each table you play at forms a separate session.  But is this treatment correct? And what about online poker, where a player may be playing at four (or more) tables at the same time? Is each a separate session? Does the session ever end?
Now, what exactly is a session? Unfortunately, there have been no court cases or IRS Revenue Rulings on point. Thus, we must determine the answer indirectly.
One meaning from a dictionary definition of session is “A period of time devoted to a specific activity, [such] as to recording music in a studio.” This implies that there be a discrete beginning and end to the activity.
The situations in which poker is played present good circumstances in which to test possible answers. In poker there are tournaments, where players vie for prizes awarded to those in the field that accumulate the most chips. Tournaments are held in face-to-face settings like bricks & mortar cardrooms, country clubs and at the ever-popular kitchen table as well in virtual settings such as online cardrooms. Poker is also played, of course in live or “ring” games, where competition is only among the players at a single table and any player is free to leave with his remaining chip at any time. Again, these games can be face-to-face or in a virtual environment online.
In poker tournaments a player buys an entry for a specified sum, plays until he is eliminated (or wins), and receives a prize if he finishes “in the money.” Poker tournaments, it would seem, are discrete events; each should be its own separate session, regardless of the number of tables to which a player may be moved or the number of days over which the tournament is played.
Live games, though, are murkier. The method that I was originally taught was that your play at any one table at any one set of limits is a session. This method is certainly acceptable to the IRS because it maximizes the amount of income a taxpayer would report[10a] . Assume that I am playing in a live ring game of Texas hold’em, and I start at Table 1. I play for 15 minutes and win $20. I then move to Table 2 where I lose $50 in 30 minutes. Finally, I move again to Table 3 where I win $30 over the next hour, resulting in my breaking even for the play at the three tables. Even if I were playing the same limits I would at the end of the play for these three tables have $50 in income along with $50 in losses (using the method described above). Of course, I really played for one hour and 45 minutes and broke even.
The Fortune method fails the common-sense test. Assume that A goes to a cardroom and plays in Texas hold’em games exactly as described. The games are ‘must-move’ games – players are forced by the cardroom to move from one table to another so that the main game always remains full. A has come to the cardroom for a short 1 hour, 45 minute session of hold’em. At the end of that time he racks up his chips, cashes them in, and leaves. From his point of view he has played one session (at one set of limits) and broken even.
Now assume that one evening B goes to the cardroom wanting to play $6/$12 Omaha a high/low poker. When he arrives that game is full and he puts his name on the waiting list for it. He notices that the $3/$6 Omaha game has a seat and decides to play that game until there is a seat in the $6/$12 Omaha game. He buys in for $60 and loses $10 in the $3/$6 game in the hour he is waiting for a seat in the higher-stakes game. He is then called to the $6/$12 game, buys another $70 of chips to add to the $50 he has remaining from the smaller game and plays for an hour in the $6/$12 game (winning $50), and then cashes out for a total of $170. Thus the net win for the evening is $40.
C goes to the same cardroom that evening, also wanting to play $6/$12 Omaha. While he waits for that game he elects to play in $4/$8 Texas hold’em game. He wins $50 while waiting an hour for the Omaha game. He is then able to get into the Omaha game where he augments his chips and plays for an additional hour, losing $100.
Finally, D then arrives at the same cardroom. He elects not to play in any game while waiting for the $6/$12 Omaha game. After an hour wait he plays in that game, losing $20. After an hour playing in that game he cashes out and buys into the cardroom’s daily tournament. He plays in that tournament for two hours (losing his buy-in/entry fee of $50), and then re-enters that $6/$12 Omaha game. He plays in the Omaha game for two hours, winning $100. What are the session results for B, C and D?
Before we answer that question let’s look at a useful analogy – a blackjack player. Our hypothetical player enters a casino, buys $1000 in chips, and starts playing at Table BJ-7 betting $5 per hand. After an hour he has lost $100. He decides he doesn’t like the dealer, moves to Table BJ-8 and now bets $10 per hand. After an hour he has won $500 at this table. He cashes out at the cashier’s cage with a net win of $400. In my view, the blackjack player has played one continuous session for two hours at two different tables. If he were to come back later that day and play more blackjack he would be starting a new session.
Poker Player B has a net win of $40 and I believe can report his win as one session. He played the same game continuously. When he finished playing $3/$6 Omaha he did not cash out his chips; rather, he augmented (bought more) his chips to play $6/$12 Omaha.
Player C has a net loss of $50. While C did play a continuous two-hour session, he played in two different games (Texas hold’em and Omaha). I believe C should report two different session results: a $50 win in Texas hold’em and a $100 loss in Omaha.
Finally, Player D has a net win of $30 but I believe he will have to report three sessions. He effectively cashed-out when he sat down in the tournament – he did not continuously play in a live game. Thus, D has a $20 losing Omaha session, a $50 tournament loss, and a $100 win in Omaha.
We, thus, have a rule: a player can net his results in two (or more) different games/tables if they were the same poker game playedcontinuously as part of the same session. This is true for A and B but not C and D.
Now, what about an online player playing multiple games at the same time? Take Player E, who plays at one online site. He plays simultaneously at four different virtual tables: Tables 17 & 18 in $1/$2 Texas hold’em games and Tables 19 & 20 in $1/$2 Omaha games. E wins $10 at Table 17, loses $20 at Table 18, wins $30 at Table 19 and loses $5 at Table 20 while playing these tables simultaneously during the same one-hour period.
There are no rules created by the IRS to treat online gambling differently than gambling in a bricks & mortar cardroom. This means that we can apply the above rule. E has two sessions, a loss of $10 in hold’em and a win of $25 in Omaha.
What if a player were to keep himself logged into the online site 24 hours a day? Would he be able to say that his play over the entire year was one long session? This fails the smell test – you are not playing continuously over that year. As long as your play is continuous and in the same game it can be counted as one session even if it spans more than one calendar day..
In conclusion, determining what constitutes a “session” is not as easy one would think on first glance. The common-sense definition, though, of playing the same game continuously should stand up to IRS scrutiny.
 26 U.S.C.
 IRS Publication 529 (Miscellaneous Deductions) at page 11, states, “You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction..”. professional gamblers are allowed to net their wins and losses .
 Doffin vs. Commissioner, T.C. Memo. 1991-114
 Sec. 6001 sec. 1.6001-1(a), Income Tax Regs
 Adamson v. Commissioner [84-2 USTC ¶ 9863], 745 F.2d 541, 548 (9th Cir. 1984), affirming a Memorandum Opinion of the US Tax Court (Dec. 39,154(M)].
 Indeed, an author in Fortune magazine wrote in an article in 2000: “…the IRS mandates that [one] keep precise records of every session he plays all year. If [one] plays one hand and then switches tables – yep, he has to make a whole new entry [in his diary].” Lee Clifford, “Burden of Proof,” Fortune, October 30, 2000; accessed on www.fortune.com. It is unlikely that the quote is completely true.
 Sec. 1.274-5T(c)(2)(i) and (ii), Temporary Income Tax Regs., 50 Fed. Reg 46017 (Nov. 6, 1985)
 The author did a search of the Lexis-Nexis database and did not turn up any cases on point. Additionally, a search of a database with IRS Revenue Rulings (from 1951 to the present) failed to find for any Rulings on point.
 American Heritage Dictionary of the English Language, Fourth Edition, accessed at www.dictionary.com.
[10a] The IRS usually accepts any method that results in maximizing income. However, the IRS can also accept other methods that result in a smaller income amount.
 While it is possible that the IRS would accept two different games played as the same continuous session, the author feels that the wagers being made in different games are, by their very nature, different; thus, they must be treated as different sessions. The author feels that the IRS would not accept, in an audit (examination) two different games played continuously as the same session.
 In a recent article in CardPlayer (March 26, 2004, page 36), Yolanda Smulik-Roche and Roger C. Roche answer a reader’s question, “If I play poker online, do I have to pay any taxes at the end of the year?” by stating “Only if you were a winner for the year.” This is clearly contrary to the IRS Code and Publication 529. Whether you gamble online or in a brick and mortar cardroom, you must add your winning sessions together and include those as part of Other Income even if your dollar losses from losing sessions exceed your dollar winnings from winning sessions!
 A good example of this is a multi-day tournament. A tournament is a discrete session, even if it begins on Monday and ends on Friday. Another example would be if you started playing at 11:30pm and finished your session at 1:30am, playing continuously over that two-hour period. That is clearly one two-hour session, not a session of 30 minutes followed by a 90-minute session.