Mr Lotto: How to handle losing lottery tickets with the taxman

Thursday, January 17, 2008 posted 09:51 AM EST

The new year brings our yearly obligation to the taxman, and that has one reader wondering if all those losing tickets might finally pay off.

"Does accumulating nonwinning tickets help at the end of the year when one files tax?" wrote Kimberly. "Last year I lost approximately $10,000, and I did not save any losing tickets. Can I file it in my tax claiming that I have lost $10,000?"

And the answer is: yes and no. You can legally offset any money you won gambling during the same tax year with losing lottery tickets. But you cannot deduct losing lottery tickets from regular income.

So, Kimberly, if you won $10,000 in 2007 from the lottery, horse tracks, casinos, etc., then you could avoid paying any tax on those winnings if you could show them $10,000 in losing tickets.

Will they actually check the tickets?

They may very well want to see them, and some form of documentation concerning your playing habits, such as a day planner or journal showing wins, loses and where you play.

So, if you're a regular lottery player it's a good idea to keep all losing tickets at least until the end of the year. Who knows? The big win could come on New Year's Eve.

This next letter sounds too crazy to be true. But writer Joseph Keohan of Ozone Park, Queens, says it really happened.

"On Jan. 1, I purchased two $5 Quick Pick Mega Millions tickets. The first four sets of numbers were identical on both tickets, exact same numbers in exact same sequence, except for the Mega Ball numbers, which were all different.

"Is it possible for a 'completely random' system to generate a group of 20 numbers (four sets of five each) in exactly the same sequence? I'm guessing the odds of thishappening are in the billions to one! I wouldbe very interested in your thoughts on this phenomenon."

The first question is whether you got both tickets from the same store. It should be impossible to get them back to back in the same store.

But if they came from two different stores, then this is possible. The random number programs in each terminal are identical and are keyed to the time the terminal is switched on.

Stephen Allensworth is the publisher of New York's Lotto News and 3&4 Digit Lotto Stats, sold at most lottery agents.

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