A couple of years ago the IRS wanted to lower the W2-G threshold to $600. The casino industry screamed and bitched enough that the IRS didn’t do it.

Also, you keep a log with winning and losing sessions recorded separately. If you hit a taxable for say 4K, that is not the number that goes in the log for that session unless you were exactly even when you hit it. If you were stuck for $500 and quit when you hit the jackpot then $3500 goes in the log. If you were stuck $4500 when you hit it, and quit, the session is recorded in the losing sessions for $500. The W2-G’s don’t have anything to do with the accounting. It only matters what you won or lost in the session. The IRS is well aware of this.