Are a Poker Player’s Missing Lockbox Funds a Tax Deduction?
As the WSOP comes to a close, two poker players ended up losing money in an unexpected fashion. We will focus on the first of those players today.
Mike Gorodinsky kept part of his bankroll in casino chips in his Bellagio lockbox. In June, he went to his box to withdraw some of those chips. The problem? When he opened his box, it was empty. It is unclear how or when the box was emptied, but he shared the full account with Pokernews, which can be read here.
I will not speculate what happened to his chips, but we can explore any tax relief he may be entitled to as a result of the missing money. Theft and casualty losses are not always deductible, so let’s walk through the steps and weigh the options.
1. Was the money stolen?
If a law was broken in the state of Nevada, the event could, legally, qualify for tax relief. A police report is not necessary to prove a crime was committed, but it helps strengthen your case if the IRS challenges your position.
2. Was the theft related to personal or business property?
If Gorodinsky classifies himself as a recreational gambler, the theft loss will be disallowed. The Tax Cuts and Jobs Act of 2017 eliminated personal casualty and theft deductions from 2018-2025, unless related to a natural disaster or Ponzi scheme. This does not qualify for any such relief.
However, if he classifies himself as a professional gambler (which seems to be the case), the theft relates to his business assets. If this is true, he could be granted a deduction for the amount of the theft on Form 4684.
3. Was any reimbursement or compensation received?
The amount of the loss claimed would be offset by any insurance proceeds or compensation received from the casino. I can confidently say there will be no insurance proceeds, but if the casino offered any comps for the inconvenience (again, unlikely), it would reduce the amount of theft deduction.
4. Are there any other options?
Similar to theft losses, personal casualty losses are no longer deductible. All casualty losses (outside of natural disasters) are disallowed for recreational gamblers.
However, if Gorodinsky is a professional gambler, he may be able to deduct the funds as a casualty loss if he can show that the casino misplaced the funds. He would need to prove that a loss like this is “unusual” in his line of business. This is not a black and white issue and will heavily rely on the facts and circumstances of his case.
If he was responsible for misplacing the funds, or incorrectly remembered the contents of the box, he would not be entitled to a deduction (even if business-related).
Casino Box Best Practices
If you have contents in a casino box, it is important to take inventory of the money or items inside each time you visit. In order to do so, you should:
Create a detailed list of all items or funds in the box. This includes any casino chips, cash, or valuables
If the box contains casino chips, take inventory of each chip. This includes the denomination, issuing casino and any other relevant information
Take a picture of the contents of the box to confirm your records
Each time you visit your box, make sure to:
Note the date, location, purpose and time of the visit
Keep record of additional documentation placing you inside the casino that day (players card history, sessions played, meals, etc.)
Ask the casino to log the visit to your box, so it can be verified by a third party
Note the contents of the box when opened. This should match the inventory of your box from your prior visit
Detail any items that are deposited or withdrawn from the box during your visit
Be very specific. If you are swapping $5,000 of Wynn chips for $5,000 of Bellagio chips, make a note. Although the net value of the contents did not change, the makeup of your inventory is now different.
Note the contents of the box after the visit
Keep all inventory records accessible for your next visit