1. All income received from gambling is taxable income
2. You should receive a Form W-2G which states your earnings form the payor> Regardsless of whether you receive a Form W-2G or not, it must be reported on your tax return.
3. You are allowed to deduct your gambling losses up to your winnings. You would need to have keep receipts and supporting documents of losses.
source: http://www.irs.gov/newsroom/article/0,,id=172190,00.html
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