This is precisely my concern. Maybe you get an auditor whose daddy gambled away their college fund, so they hold your feet to the fire. It could be tricky finding a tax attorney who is both local and also proficient in gaming activity tax law. I see a lot that could go wrong here so I'll continue to eat the tax liability for now. I think we can all agree that this situation is not at all fair to recreational gamblers and would almost seem to invite APs to cook their books.