Money ManagementHere's an unhappy situation -- being flat broke on the second day of a five day gambling vacation.
To avoid this, you need to set a gambling budget and stick to it. Some say "Never bet more than you can safely afford to lose." But I believe that's a dangerous way to think about it. I prefer to say "Never bet more than you planned to bet".
Here's the difference. You may be well off, and you could afford to wager a few thousand dollars tonight. If you lost it, it would have zero effect on your life or your future. But you only planned to play with $400, and that's what you brought to the casino with you. If you lose that $400, don't go to the ATM. That's the first step down a slippery slope.
Here are a few terms to help keep things straight:
Bankroll: This is all the money you have that is designated for gambling. Think of it as your gambling savings account. It may be in the bank, or in a safe deposit box, or in your shoe, but it should be kept completely separate from your other funds. Don't mix your bankroll with money that you use for daily living.
Daily Budget: The money you have budgeted for gambling today.
Session Bankroll: All the money you have designated for gambling this session or period. Normally a portion of a day, a few hours.
Loss Limit: The amount of money you are willing to lose in a period or session.
Here's what we do:
Decide on a gambling budget for the week and for each day of the week
At the start of the day, we take out the money for that day, for example $400 each.
We further divide the daily budget into session bankrolls. For example, $200/session
We decide what the acceptable loss limit is for the session up to the session bankroll limit. If we reach a loss loss limit we end that session (or go home if the daily budget is exhausted).
We work hard to stick to the plans laid out above.
If you gamble long enough, eventually you'll hit a jackpot that requires the casino to pay you by hand, in cash, and to give you a W2-g. Now you have the privilege of paying taxes on your winnings.
Any time you hit a jackpot larger than $1199 the casino will give you a W2-g. Some machines are set up to pay exactly $1199 for this reason!
But, you say that you've lost more than you won this year? If so, you may not have to pay any taxes on this jackpot.
A few things to do in advance of this occurring.
Keep records of your gambling trips. Maintain a log with date, starting bankroll, ending bankroll, profit or loss. In addition to this, casinos will provide you with a win/loss statement at the end of the year based on their records.
Ensure you report all gambling losses to offset the wins. For example, keep old losing lottery tickets, etc.
State tax laws vary, so ensure you understand the laws in your state, and the state where you're gambling.
If you have difficulty sticking to a budget, and often exceed your planned gambling loss limits, you may have the beginnings of a gambling problem. Please keep gambling fun for you and your family. Take a look at these sites:
National Council on Problem Gambling: www.ncpgambling.org
Gamblers Anonymous: www.gamblersanonymous.org
Harvard Medical School self help: http://basisonline.org/changetools.htm