What is the session method for gambling taxes in 2026?
By the W2gMatch team · Sources checked 09-28-2026 · General information, not tax advice.
The session method nets wins and losses within a session and reports each session's result; sessions are never netted against each other. IRS Chief Counsel memo AM 2008-011 (December 5, 2008) describes it for slot play, and in Shollenberger v. Commissioner (T.C. Memo. 2009-306) a $2,000 jackpot became $1,100 of income. For 2026, only 90% of losing-session totals is deductible.
Prefer to watch? The half-minute version
How does the session method work?
Under the session method, gain or loss is measured when you cash out, not on each spin or bet. IRS Chief Counsel Advice AM 2008-011 puts it this way: “a casual gambler, such as the taxpayer who plays the slot machines, recognizes a wagering gain or loss at the time she redeems her tokens,” because the fluctuating wins and losses left in play are not accessions to wealth until then. [1]
The memo's example: a player who enters with $100 and redeems $300 has a $200 wagering gain, “even though the taxpayer may have had $1,000 in winning spins and $700 in losing spins during the course of play.” A player who enters with $100 and loses it all has a $100 wagering loss, even with $1,000 of winning spins and $1,100 of losing spins in between. [1] The memo also notes that a casino may issue an information return for a single winning spin even though the player then wagers and loses that amount before cashing out; the reported payment “is not necessarily” a taxable wagering gain. [1]
The memorandum's own example. The $350 goes on the return as income; the $610 is an itemized deduction capped at the $350 of gains. Without sessions, the same play would be reported as thousands in winning spins and thousands in losing spins.
One line in the memo matters for anyone relying on it: “This advice may not be used or cited as precedent.” [1] The Tax Court reached the same result the following year in Shollenberger v. Commissioner, T.C. Memo. 2009-306, which is the authority preparers point to. [3]
Where does the session method come from?
Section 165(d) of the Internal Revenue Code speaks of gains and losses from wagering “transactions” without defining the word. [1] [4] Five documents supply the session reading. None of them is a statute or a regulation, which is why the method rests on a log rather than on a form.
| Document | What it is | What it says | Src |
|---|---|---|---|
| AM 2008-011 | IRS Chief Counsel Advice, dated December 5, 2008, released December 12, 2008 | A casual slot player recognizes gain or loss when she redeems her tokens, not on each spin. The memo says it may not be used or cited as precedent. | [1] |
| Shollenberger v. Commissioner, T.C. Memo. 2009-306 | Tax Court memorandum opinion, 2009 | A $2,000 jackpot in a session that ended $1,100 ahead was $1,100 of income; the court refused to net that gain against the year's other losses. | [3] |
| LaPlante v. Commissioner, T.C. Memo. 2009-226 | Tax Court memorandum opinion, 2009 | Cited with Shollenberger in Notice 2015-21 for the rule that gross income from slot play is determined on a session basis. | [2] |
| Green v. Commissioner, 66 T.C. 538 (1976) | Tax Court, 1976 | Cited in AM 2008-011 for the view that computing gain or loss on every single play is unduly burdensome and unreasonable. | [1] |
| Notice 2015-21 | Proposed revenue procedure, March 2015, comments due June 1, 2015 | An optional safe harbor defining a slot session as one type of game, one establishment, one calendar day. The final revenue procedure was never issued. | [2] |
My W-2G is bigger than what I walked out with. What do I report?
Report the session result, and keep the log that proves it. In Shollenberger v. Commissioner, T.C. Memo. 2009-306, the taxpayers brought $500 into a Charles Town, West Virginia casino, hit a $2,000 jackpot, lost $400 more the same day and left with $1,600. The Tax Court held the reportable gambling income was $1,100: the $2,000 jackpot less the $500 they brought in and the $400 they lost afterward. [3]
Shollenberger v. Commissioner, T.C. Memo. 2009-306. The W-2G said $2,000; the session said $1,100.
The complication is matching. Form W-2G box 1 reports the payment, the IRS receives a copy, and there is no box for losses, so a return showing less gambling income than the W-2G total can draw a matching notice. [7] Preparers handle it in one of two ways: report the session totals on Schedule 1 (Form 1040) line 8b with the log ready to answer a notice, or report the W-2G total and show the difference as a separate adjusting line with an explanation. Form 8275, Disclosure Statement, is the IRS form for disclosing a position “not otherwise adequately disclosed on a tax return,” and some preparers attach it when session income is below the W-2G total. [10] Which route fits your return is a judgment for the preparer signing it. If a notice does arrive, the CP2000 page explains how to answer it.
What counts as one session?
For tax purposes a gambling session is play on one type of game at one establishment within one calendar day, under the IRS's proposed safe harbor in Notice 2015-21. [2] The Notice's definition: “A session of play begins when a patron places the first wager on a particular type of game and ends when the same patron completes his or her last wager on the same type of game before the end of the same calendar day.” The calendar day runs from 12:00 a.m. through 11:59 p.m. in the time zone where the wager is placed. [2]
Three things start a new session under that definition:
- Another type of game. Slots and blackjack on the same afternoon are two sessions.
- Another establishment. Leaving one casino and playing at a second one the same day begins a separate session at the second casino. [2]
- Midnight. Play that runs from 10 p.m. to 2 a.m. is one session through 11:59 p.m. and a second session from midnight. [2]
Stopping and coming back does not. A player who stops and then resumes play at the same establishment on the same calendar day “must use the same session of play.” [2] The Notice's examples walk through it:
Notice 2015-21, section 6.05. The safe harbor covers only electronically tracked slot play (a player's card or similar system), and a taxpayer who uses it for one day at a casino must use it for all tracked slot play at that casino for the year.
The safe harbor was proposed in March 2015 with comments due June 1, 2015, and the final revenue procedure was never issued. [2] [8] It is still the most detailed statement the IRS has made about session boundaries, and the Tax Court cases behind it did not depend on it.
Can I net the whole year as one session?
No. Sessions are never netted against each other. AM 2008-011 states that casual gamblers “may not net their gains and losses from slot machine play throughout the year and report only the net amount for the year,” and Notice 2015-21 says the safe harbor “does not permit gains or losses from separate sessions to be netted against each other to determine gain or loss for a taxable year.” [1] [2] In Shollenberger the court refused to offset the $1,100 session gain against $2,264 of losses from other 2005 gambling. [3]
Winning sessions add up to your gambling income on Schedule 1. Losing sessions add up to your gambling losses, deductible only on Schedule A, only if you itemize, and only up to the income reported. [1] [5] A player who takes the standard deduction deducts no losses at all, which is why the session figure on the income side matters even to people who never itemize. [1]
Per bet, per session or per year: the same day three ways
The clearest illustration comes from KPMG's 2025 analysis of the new loss limit: a bettor places 1,000 wagers in one day, 500 winners totaling $10,000 and 500 losers totaling $8,000, and has no other gambling that year. [8]
| Method | Income reported | Loss deduction | Taxable |
|---|---|---|---|
| Per bet, tax year 2025 (100% of losses, itemizing) | $10,000 | $8,000 | $2,000 |
| Per bet, tax year 2026 (90% of losses, itemizing) | $10,000 | $7,200 | $2,800 |
| Per bet, either year, standard deduction | $10,000 | $0 | $10,000 |
| Per session, 2025 or 2026 (one winning session) | $2,000 | $0 | $2,000 |
| Whole year netted as one figure | Not allowed. Separate sessions are never netted against each other. | ||
Per-bet figures follow KPMG's example; the per-session row applies AM 2008-011 to the same facts. [8] [1] Whether all 1,000 wagers are truly one session depends on the game and the boundaries discussed below; for a sportsbook day the answer is not settled.
Why do sessions matter more under the 2026 90% rule?
For tax years beginning after December 31, 2025, section 165(d) allows a deduction for wagering losses that “shall be equal to 90 percent of the amount of such losses during such taxable year” and “shall be allowed only to the extent of the gains from such transactions during such taxable year.” [4] The change was made by section 70114 of Public Law 119-21, signed July 4, 2025, and the same amendment folds otherwise-allowable expenses of carrying on wagering into “losses.” [4] Tax year 2025 returns still deduct 100% of losses up to winnings.
The 10% haircut applies to the loss figure you report. The session method shrinks that figure without changing the year's real result, so it shrinks the phantom income. KPMG's example: $101,000 of winnings and $100,000 of losses reported per wager leaves $90,000 deductible and $11,000 taxable on a $1,000 net win; at an illustrative 25% rate that is $2,750 of tax, 275% of the net. [8] The same play recorded by session would report only the net of each winning session as income and the net of each losing session as a loss, so the 10% cut applies to a far smaller number. In the memo's ten-visit example, 90% of the $610 of losing sessions is $549, which is still above the $350 of gains, so the cap at gains binds and the 2026 result equals the 2025 result: $350 deductible.
Arithmetic sets the boundary: 90% of losses is below winnings only when losses are less than about 111% of winnings. Above that, the cap at winnings was already the binding limit and the 90% rule changes nothing. The 90% cap page and the phantom income guide work through more cases, and the calculator runs your own session totals under both years' rules.
Does it apply to sports betting, poker, table games and online casinos?
There is no published IRS session rule for sports betting, poker, table games or online casinos. The Notice 2015-21 safe harbor covers electronically tracked slot play only, and slot play is the only activity on which the IRS or the courts have spoken. [2] [8] The Notice did ask for comments on “whether a safe harbor method to determine a wagering gain or loss should be developed for other forms of gambling, including, but not limited to, keno, table games, and pari-mutuel wagers,” and none followed. [2]
| Activity | Session unit used | Authority | Src |
|---|---|---|---|
| Slot machines, electronically tracked | One type of game at one establishment within one calendar day; play at a second casino is a second session. | Proposed safe harbor, never finalized. Session basis accepted by the Tax Court. | [2] |
| Horse racing, dog racing, jai alai | All wagers placed in a single parimutuel pool and represented on a single ticket are aggregated and treated as a single wager. | W-2G reporting rule, not a session rule; practitioners read it as pointing to one race as the unit. | [7] |
| Sportsbooks, online or retail | Practitioner positions range from one event, to one sportsbook per day, to all sportsbooks per day. W-2Gs are issued per wager. | No published IRS session rule. | [8] |
| Poker tournaments | Practitioners commonly treat one tournament as one session, even when it runs over several days. | No published IRS session rule. | [8] |
| Table games | Practitioners use per game per day, or all table games at one casino per day. | No published IRS session rule. | [8] |
| Online casino (iCasino) | Open questions: one session per app per day, or per product; whether live-dealer and virtual tables are one session. | No published IRS session rule. | [8] |
Practitioners extend the slot logic by analogy: two casinos in one day are two sessions; slots, blackjack and a poker tournament at one casino in one day are three. [8] Open questions KPMG lists include parlays that span several games or days, whether a casino's “gaming day” for its own records matches the player's calendar day, and same-day play in an app and on the casino floor with the same operator. [8] For sports bets specifically, each settled wager has its own result and W-2Gs are issued per wager, so many preparers report sports bets wager by wager and use sessions only where play is continuous and tracked. Whatever approach a return takes, a contemporaneous session log is the record that substantiates it.
How do session results go on the return?
- Add up the winning sessions. That total is gambling income on Schedule 1 (Form 1040) line 8b, reported in full whether or not you itemize. [5]
- Add up the losing sessions. That total is your wagering losses. For tax year 2025 the deduction is 100% of it; for tax year 2026 it is 90% of it. [4] Either way it is allowed only up to the income in step 1. [4] [5]
- Take the deduction on Schedule A as an other itemized deduction, only if you itemize. Topic 419: “The amount of losses you deduct can't be more than the amount of gambling income you reported on your return.” [5]
- Reconcile to the W-2Gs. Compare the W-2G box 1 total to the session income you reported and be ready to show the log for the difference; see the section on W-2Gs above and the reconciliation guide.
What does the session log have to contain?
Topic 419: “To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses.” [5] Publication 529 lists four items for the diary: the date and type of your specific wager or wagering activity; the name and address or location of the gambling establishment; the names of other persons present with you; and the amounts you won or lost. [6]
Publication 529 also names the proof it expects by game: for slot machines “a record of the machine number and all winnings by date and time the machine was played,” for table games “the number of the table at which you were playing,” validated keno tickets, bingo games played and tickets bought, racing tickets won and lost, and lottery purchases by date. [6] A session (a continuous period of one type of play at one establishment, ended by cashing out or by the end of the calendar day) log that records the operator, the game, start and end time, buy-in, cash-out and any W-2G received covers all four diary items for each session. The session log template has those columns, and the win/loss statement page explains why the casino's annual statement supports the log but does not replace it.
Is the 90% rule being repealed?
Not as of this page's review date. On September 16, 2026, the House Ways and Means Committee voted 38-5 to advance H.R. 10357, a digital-asset tax bill that carries language restoring the full gambling loss deduction retroactive to January 1, 2026. [9] The House was not scheduled to return until after the November 2026 midterm elections, the Senate has not acted, and nothing is enacted, so the 90% rule is the law for 2026 returns and the session method is the lawful way to keep the reported loss figure honest and small. [9] The loss deduction page tracks the status.
How to keep a session log
- Record the session before you play. Date, operator or casino, type of game, start time and the amount you put in play.
- Close it when you cash out. End time and the amount you left with. The difference is the session's gain or loss.
- One line per session. A new casino, a new day or a different type of game is a new line. Do not net lines against each other.
- Attach the evidence. Ticket-in ticket-out slips, app wagering history exports, player's club records and the annual win/loss statement from each operator.
- Keep it with the return. The log supports the losses on Schedule A and the winnings on Schedule 1 for as long as the return can be examined.
Related questions
Is the session method legal?
Yes for casual slot play. IRS Chief Counsel Advice AM 2008-011 (December 5, 2008) and the Tax Court in Shollenberger v. Commissioner (T.C. Memo. 2009-306) both measure gain or loss when you cash out, not per spin. There is no published IRS session rule for sports betting, poker, table games or online casinos; preparers apply the same logic with a contemporaneous log.
What is one gambling session for tax purposes?
Under the IRS's proposed safe harbor in Notice 2015-21, a session is play on one type of game at one establishment within one calendar day, 12:00 a.m. through 11:59 p.m. in the casino's time zone. Changing game type, moving to another casino or crossing midnight starts a new session. The safe harbor was never finalized, but the Tax Court accepted session-based reporting in Shollenberger v. Commissioner.
Can I treat the whole year as one session?
No. AM 2008-011 says casual gamblers may not net their gains and losses throughout the year and report only the net amount, and Notice 2015-21 ends a session no later than 11:59 p.m. at one establishment. Winning sessions are income; losing sessions are itemized losses, capped at the income reported.
My W-2G says $2,000 but I left the casino with less. What do I report?
In Shollenberger v. Commissioner the taxpayers brought $500, hit a $2,000 jackpot, lost $400 afterward, left with $1,600 and were held to have $1,100 of gambling income, the session result rather than the W-2G figure. The IRS still receives the W-2G, so keep the log that supports the difference and expect the preparer to decide how to present it, possibly with a Form 8275 disclosure.
Does the session method reduce the 2026 90% loss cap?
It shrinks the loss figure the cap applies to. With 500 winning bets totaling $10,000 and 500 losing bets totaling $8,000 in one session, per-bet reporting deducts only $7,200 (90% of $8,000) and taxes $2,800; session reporting taxes the $2,000 net. The 90% cut still applies to the total of your losing sessions, and the deduction is still limited to your winnings.
Does the session method apply to online sportsbooks?
There is no published IRS session rule for sports betting. W-2Gs are issued per wager, and many preparers report sports bets wager by wager. A session log still provides the substantiation the IRS asks for.
What records do I need for each session?
Date, casino or app, type of game, start and end time, buy-in, cash-out, any W-2G received and the names of people with you, which are the diary items in IRS Publication 529 and Topic 419, supported by tickets, player's club records and app history. Record it when the session ends, not at tax time.
Can a gambling session span multiple days?
No, a gambling session cannot span multiple days; for tax purposes, a session must end by 11:59 p.m. each day, as clarified by IRS Notice 2015-21. This daily cutoff ensures that gains and losses are accounted for within a single tax day, preventing the netting of activity across different days.
The paid file, one click away
Get your 2026 file ready for January — from $49
W-2Gs and statements are filed to the year as they arrive, so the 2026 return starts reconciled in January, under the 2026 loss rules. Filing 2025 late, or amending it? The same file works for 2025.
- IRS transcript read form by form
- Each W-2G matched to its statement
- One package your preparer signs off
Essential covers up to 3 casinos or sportsbooks; a bigger season upgrades for the difference. One-time payment for the tax year, no subscription. Document organization, not tax advice; a licensed preparer reviews and files the return. All plans.
Free on every account
The easiest way to track your gambling: say it, snap it, hand it off
Say it
Speak or type the night. The AI box fills the entry.
Pick the place
One tap finds the casino near you and your players card.
Snap the W-2G
It reads the form and files it to the right tax year.
Your sessions, places and W-2Gs are filed as you go. At tax time, hand it off: the assistant reconciles them with your casino statements and IRS transcript in one file.
Start the session log, then run the numbers
The template has one line per session with the fields the IRS diary calls for. When the year is logged, the calculator shows what the winning and losing session totals mean under the 2025 and 2026 rules.
Sources
- IRS Office of Chief Counsel, AM 2008-011, Reporting of wagering gains and losses, December 12, 2008
- IRS Notice 2015-21, proposed safe harbor for determining wagering gains and losses from electronically tracked slot machine play, March 2015
- Journal of Accountancy, Tax Court accepts IRS method for determining gambling wins and losses, December 2009 (secondary source)
- 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings, Rev. December 2020
- IRS Instructions for Forms W-2G and 5754, Rev. January 2026
- KPMG, Gambling losses under the One Big Beautiful Bill Act, Part 2: What is a Gambling Session anyway?, 2025 (secondary source)
- Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
- IRS, About Form 8275, Disclosure Statement, page last reviewed or updated 31-Mar-2026
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.