A busy day for CSTJ Panuthos, as he deals with shilling for dollars and hustlers at the Hustler.

To clarify: Peter Phuong K. Pham and Bach T. Nguyen, 2016 T. C. Sum. Op. 73, filed 11/8/16, hereinafter sometimes referred to as “Pete & Bach,” worked for the Hustler Casino. And they hustled.

“…casinos sometimes hire house players to ensure that there are enough players to start and maintain card games or to gain an additional source of revenue from the player’s winnings. Petitioners explained that as house players for Hustler Casino they would start a game of ‘Texas Hold ‘Em’ poker (Texas Hold ‘Em). The goal was to attract other players/customers. Petitioners each received an hourly wage.” 2016 T. C. Sum. Op. 73, at pp. 2-3. (Footnotes omitted).

But there was a hitch (isn’t there always?).

“…they were required by Hustler Casino to use their own funds for betting in the games of poker, including paying the same table fees as customers not employed by that casino. The table fees included a regular table fee of $5 per hand and a collection for a “bad beat jackpot”, which was $1 per hand. Hustler Casino set aside one dollar from each hand for the bad beat jackpot. Under certain circumstances not described in this record, Hustler Casino would decide that a player had ‘hit the jackpot’. Hustler Casino would then redistribute the accumulated bad beat jackpot funds to the winner of that jackpot.” 2016 T. C. Sum. Op. 73, at pp. 3-4. (Footnotes omitted).

Hustler didn’t train Pete & Bach, or require them to exhibit or maintain any skillsets, just to present a neat appearance and keep playing.

Pete & Bach “…assert that initially they tried to keep track of their poker winnings and losses by writing down the amount won or lost at the end of each day, but after a while they gave up that practice because it is ‘bad for your psyche * * * you need to be strong mentally’ when playing cards.” 2016 T. C. Sum.Op. 73, at p. 4.

A strong psyche doesn’t help when you’re trying to deduct your losses, even if you can claim professional gambler status. In this case, you can deduct your losses against all income to get to AGI. If not a pro, all you get is a miscellaneous itemized deduction to offset losses against winnings; losses in excess of winnings are truly lost.

“The Commissioner has suggested that gamblers regularly maintain a diary, supplemented by verifiable documentation, of gambling winnings and losses. See Rev. Proc. 77-29, 1977-2 C.B. 538. A taxpayer’s ‘contention that it was too difficult for him to maintain contemporaneous records of his gambling activities is without merit.’ Kalisch v. Commissioner, T.C. Memo. 1986-541, 52 T.C.M. (CCH) 991, 995 (1987); see also Schooler v. Commissioner, 68 T.C. 867, 870-871 (1977).” 2016 T. C. Sum. Op. 73, at p. 10.

And Cohan doesn’t help, because Pete & Bach have nothing.

Fans of C. S. Forester’s fictional hero Horatio Hornblower will remember that Horatio was reduced to shilling for shillings at whist on his return from the West Indies in 1802, in the Long Rooms at the Keppel’s Head in Portsmouth, on the same terms as Pete & Bach two centuries later.

But Horatio got to command a sloop of war as a result. Whereas Pete & Bach are just sunk.