Bulk Purchase of Losing Lottery Tickets Is an Interesting New Form of Tax Fraud
Credit: msspider66/Wikimedia Commons
A bizarre story hit the wire over the weekend at Fortune, explaining how some gamblers are selling their losing lottery tickets in bulk. Although most such listings describe the tickets as a “collectible” for legal reasons, a few spell out the real reason buyers seek them out: as a tax deduction.
The idea is that the winning gamblers can declare the non-winning tickets as personal losses to reduce their tax liability, while the losing gamblers get a rebate on their purchases.
This is, of course, completely illegal. Misrepresenting who bought the original tickets before they were scratched is a form of tax fraud. But because of the mechanics of lottery tickets — they typically don’t have the buyer’s name or any other identifying information — there’s little in the way of a paper trail.
Apparently, the practice dates to at least 2014.
Gaming America performed an eBay search and confirmed that many such listings remain available for purchase. Most of the losing ticket collections have original purchase values in the thousands of dollars, with one listing even advertising $10,000 worth of tickets. Sellers seem to be asking anywhere from a few dollars to a few hundred dollars for the bulk tickets.
The Fortune story noted that selling the tickets as tax write-offs runs counter to eBay’s terms of service. The site claims it will remove any listings with descriptions suggesting an illegal use for the products. Nonetheless, several remain active, including some with references to taxes.
Buying the losing lottery tickets is perfectly legal. However, their utility as a legitimate tax offset is probably limited, at least for those who wish to put their gambling winnings to serious use.
How Buying Losing Lottery Tickets Can Reduce a Tax Bill
Most gambling wins don’t produce a tax form. But individuals are still theoretically required to pay taxes on anything they win.
However, gamblers can keep track of their wins and losses, paying taxes on the net winnings. In the case of an audit, it would be quite helpful for their cases if they kept receipts of their losing bets, which they’d claim against their winnings.
That’s where the purchased losing lottery tickets come in.
One listing referenced in the Fortune story offered $90,000 worth of losing lottery tickets for $575. A gambler who won, say, $50,000 could use that collection of losing tickets to offset their entire year’s worth of wins. In theory, they could pocket the entire $50,000 at that point, since they’d file a return that would zero out their entire win.
A roughly 30% tax on that $50,000 would have cost that same gambler $15,000. So, while paying $575 for dead lotto tickets seems absurd at a glance, it’s a pittance compared to the person’s tax savings.
Some Gamblers May Be Looking to Offload New Tax Liability
The tax year 2026 may produce more demand than ever for used betting tickets, as the tax climate for gamblers has never been less friendly.
Last year, the Trump administration’s One Big Beautiful Bill Act instituted a new tax law, one quite unpopular among gamblers. It capped the aforementioned deductions at 90% of a person’s winnings. Therefore, a breakeven gambler would be expected to pay taxes on 10% of their play volume.
That’s the idea in theory. The reality of the tax change looks even more complex, due to different possible interpretations.
Efforts to reverse the change have gained little traction thus far. Even some of the Trump administration’s biggest backers have called for a repeal.
Though the OBBBA passed last summer, 2026 is the first tax year whose filings will reflect the change. So, if a repeal doesn’t happen, then 2027 filings will have to abide by the deduction cap.
Issues Abound With Potential Used Lottery Ticket Purchases
The idea of purchasing a pile of used lottery tickets to offset gambling winnings sounds simple and brilliant in theory. However, the idea starts breaking down when one zooms out and looks at the bigger picture, especially for winners looking to put serious chunks of money to use.
Famed poker player Dan Harrington wrote extensively in his Harrington on Hold’em books about tax strategies for poker players. The same ideas apply to gamblers at large.
Harrington explained that while hiding poker winnings from tax authorities is relatively easy, problems follow when the player wants to put the money to use. It becomes difficult to make large purchases or investments without increasing exposure to an audit. Such an audit will often cause much greater damage than just paying the taxes in the first place.
Therefore, Harrington wrote that players are much better off simply paying the taxes and then properly investing their winnings. Not only does that keep them on the right side of the law, but it also allows them to reap greater long-term rewards from their money.
Poker players and other gamblers don’t need to look very hard to find a cautionary tale. High-profile attorney Tom Goldstein just received a six-year sentence for tax and mortgage fraud, completing an incredible fall from grace after a decorated legal career that included arguing cases in front of the Supreme Court.
Image credit: msspider66/Wikimedia Commons (license)
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