[Legislurker]

Because the IRS wants every bit of income it can get. Im sure they would stand behind you at a $1 slot machine and take out 33% every spin that hit mixed bars. They want to bump people up to pay AMT. Every instance of reportable, taxable income they cna find they want paid. TO them gambling money is discretionary funding you don't need. So what if you lost 10k to win 8k, they want the 8k. Its a rapacious intrusive mentality that is part of their culture.
Agents sit around and brag about what they've seized or taken from people. They simply dont give a [censored] how unfair it is or whose livelihood they degrade. And they are pretty unaccountable. Like Russ said, if you fight them, you lose $ even if you win.