Super Bowl Sunday produced staggering betting numbers and the tax people must be drooling at the thought of all that potential tax revenue. A few years ago it was estimated that more than $8 billion would be bet on that year's Super Bowl, with perhaps 1 percent wagered legally in Nevada and the rest illegally in office pools, informal bets and online sites.
On Super Bowl Sunday betting takes place on just about anything to do with the game even some trivial items. Online bet placement is as big as ever. However, regardless of the gambling venue, bettors are required to report winnings on their income-tax returns. No one really knows how seriously people treat this instruction.

The district manager for H&R Block in Phoenix, Sue Taylor, cites a recent survey that indicates that one-third of respondents to the survey didn't even realize their gambling winnings were taxable.

A senior federal-tax analyst at CCH stated “If you win an informal office pool, you technically are supposed to report it. But I think the Internal Revenue Service is more concerned about Internet betting, which is easier to track through credit cards.”

Likewise, gambling losses are deductible, but only to the extent you use them to reduce winnings. In other words, you can't deduct net losses. If you are deducting losses, the IRS requires an accurate account of your wagering.
The larger gamblers do keep track. A lot of casinos will provide tracking cards on request. In the eyes of the IRS, it’s not important where your income is from; working, investments, gambling online or otherwise, it's all taxable.

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