Every tax question about online gambling comes back to one distinction: the number the casino reports and the number the law asks for are computed on different theories. This page is the whole story.
A session is one continuous stretch of play — in practice for online play, at minimum one book, one calendar day, and possibly stricter: the IRS framework speaks of a "particular type of game" at a gaming establishment, so same-day slots and table play may count as separate sessions. (That per-game-type question is under professional review.) Either way, you walk into a session with a bankroll and walk out with a result: up or down. That per-session result is the unit the tax law actually works with. Not each spin, not each bet, and not each payout.
A W-2G fires on a single qualifying payout — at the moment it happens, with no memory of what you wagered before it or lost after it. Play a heavy year and the forms stack up even in sessions you finished down. Add them up and you get a number that looks like your winnings but isn't — it's a gross-payout tally, context-blind by design. The form isn't wrong; treating it as your income figure is.
Group the year's play into sessions. Sessions you finished up are winning sessions — their net gains sum to your gambling income, the figure that lands in your AGI. Sessions you finished down are losing sessions — deductible against that income, but only if you itemize, and for tax years beginning in 2026 only up to 90% of losses. Two numbers, both computed from your complete transaction record.
This isn't a loophole — it's the IRS's own framework. Chief Counsel Advice AM2008-011 sets out per-session gain/loss computation, and Notice 2015-21 proposed a safe harbor formalizing per-session reporting for electronically tracked play. Casinos aren't required to apply it when issuing W-2Gs — which is exactly why the reconciliation is your job (or your tool's).
Session computation needs your complete transaction history — every wager and every result, timestamped, from every book — organized into sessions and reconciled against the W-2Gs the IRS already has. Summaries and win/loss statements can't do it; transaction-level exports can. That reconciliation, documented and traced, is what TaxBet computes.