Gambling and sports are inextricably linked. Sometimes the betting on games is legal, as with the Las Vegas casino sports books. Other times, folks make illegal bets with bookies.
But it's rare that a professional athlete will admit to any type of gambling.
John Daly, however, is a rare breed indeed.
The professional golfer recently talked openly about his gambling addiction that led to losses of $55 million, possibly as much as $57 million.
Actually, Daly's losses were more than that. TMZ Sports reported that $55 million, give or take a million, was the net loss Daly arrived at by looking at his tax records. Overall, Daly told the celebrity news website that he lost around $90 million and won $35 million.
As for regrets, Daly said that he doesn't have even a few. "I did it. I moved on from it," Daly told Graham Bensinger of Yahoo Sports in the videotaped interview. "I had a lot of fun doing it."
Plus, notes the popular PGA Tour player, he didn't drop the money all in one massive bet. The gambling losses were spread over 17 years, from 1991 through 2007. "What's that, $3.1, $3.2 million a year?" asked Daly, shrugging off the number.
Yeah, no big deal.
The value of good tax records: What is a big deal, at least to tax geeks, is how Daly calculated the amount of money he gambled away.
As part of writing his 2006 autobiography, "My Life in and out of the Rough: The Truth Behind All That Bull**** You Think You Know About Me," Daly said he and co-author Glen Wagonner used the golfer's old tax records to figure out his gambling losses.
"We went through all my tax records to find out because I really didn't know," Daly said.
It's nice to see good tax record keeping paid off for something in addition to accurate filing.
Daly said he spent most of his time, and lost the bulk of his money, on card games. He says he occasionally wagered on football and basketball games, but never on his own sport. Now when he wants to try his luck, Daly said he sticks to slots.
Taxes and gambling winnings, losses: If you gamble, regardless of whether it's a few dollars on a weekend match with your golfing buddies or at the slots that Daly now fancies or a bet on the upcoming final leg of horse racing's Triple Crown, you need to know the tax rules that affect your winnings or losses.
Today's edition of the Weekly Tax Tip has the details. Not only does it look at the history of sports gambling, how technology is affecting sports and betting, and the variety of sports gambling options out there, it provides the tax-related specifics when it comes to gambling.
Here are some highlights:
- Millions in illegal bets are placed with bookies or made online. But all winnings from bets, legal or illegal, are taxable income in the Internal Revenue Service's eyes.
- If your bets pay out enough to trigger required reporting, the paying gambling establishments will get your tax ID (your Social Security number) and issue you a Form W-2G with your winnings data. The IRS also will get a copy.
- Even if you don't get official documentation, you winnings are taxable income. You should report them when you file your return.
- If you're a casual bettor, report your gambling winnings as "other income" on line 21 of Form 1040.
- If you have losses, too, you must itemize to deduct them. Claim them in the "other miscellaneous deductions" section of Schedule A.
But there's a limit to the tax benefit of your gambling losses. While your losses can erase any taxable winnings you have, that's as far as they go.
If you, like Daly, lose more than you win, you can't use the excess bad bets to reduce any other taxable income. That's just the price of taking chances.
That's why if you insist on gambling, you probably should adopt Daly's approach and attitude.
"I guess you can say I always liked to take chances," he said. "Sometimes it works out. Sometimes it doesn't."
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