But if the entire gambling process was in Bitcoin. A fully bitcoin casino, no exchanging for fiat, full btc accounting.
So it's just a deposit and a loss in the given example?
Discussion
That doesn’t change the fact that you paid with Bitcoin which is a taxable event in some jurisdictions.
Your using the money to gamble triggers the event. You losing the money would be a 2nd event, and in some jurisdictions the amount of gambling losses you write off is limited to the amount of winnings. Also, you’ll have to report all your winnings and losses (no simple subtraction).
If you win $2, lose $5, your max loss deduction is $2. The remaining $3 wouldn’t be eligible.
Yeah, very good point 👌🏼