what i do practically isn't necessarily relevant when it comes to taxes.
the reason i'm asking about deductions and things is i'm wondering if there's a difference between the following two scenarios from a tax standpoint (again assuming the player's winnings aren't taxable):
1) player has a deal to pay no rake on a site.
2) player pays rake, but gets 100% of his rake back at the end of the month.
to me, the scenarios should be the same, meaning if the 100% rakeback payment is taxable then we should be able to deduct our rake as an expense so that it's equivalent to scenario 1). does that make sense?
OK, I see where you're going with this now.
I think what you're missing is that the rake is already deducted from your winnings. Let's run a scenario through your two examples. Let's say you play for an hour, joining a table with $50 and you make $12, and that the rake for this time period worked out to be $2.
1) You pay no rake, so you leave the table with $62, and should be paying tax on your $12 profit.
2) You pay the $2 rake, so you leave the table with $60, giving you $10 to pay taxes on. You also get 100% rakeback of $2, so you are paying tax on $12 (10+2).
There is no need to deduct the rake, it came off your income in the first place. You pay the same tax in each scenario.