So in 2015, when clearing an on line casino bonus, I hit a 6kish win on a slot machine, which resulted in an tax notification. No big deal.
I declared as a professional which I have been doing for a few years (since on line legalization happened or was imminent in NJ). (I've been declaring my winnings for much longer, just not as a professional when everything was off shore and sketchy as hell)
For 2015, they said I couldn't declare as a professional and to the best of my understanding their position was that if gambling isn't your primary source of income then you can't declare as a professional gambler.
Basically this resulted in a higher tax bill because the casino win pushed me to a higher bracket (had a pretty bad year and misunderstanding a casino bonus rules and getting really lucky put me in the black, well sort of with this ruling).
It looks like they are just cherry picking here and making stuff up, but maybe something has changed in the code?
I'm sending them one last letter asking for what they are basing that position on and asking them to refund my previous self-employment tax if that is the ruling, but I don't think it is worth it for me to pursue it further. (Amongst other things I don't play nearly as much as I used to; not having to file a schedule C is nice; not paying self employment tax is nice; not having to keep such rigid track of everything is nice)
It's just weird that they are suddenly interpreting it this way (I stop using an accountant for my taxes in 2014 I think, so I don't have him to consult and I don't think it is worth my effort and money to hire someone to advise me on this, since poker and bonus whoring don't generate that much any more)
So, if you play professionally for an additional revenue stream, be advised that the IRS has some (what I think) are curious rules, or maybe just guidelines that wouldn't stand up to concerted push back.