Jackpot Winner Can't Beat IRS on Tax Levy
(CN) - A Mexican citizen cannot recover more than $16 million in taxes collected by the U.S. from his gambling winnings by claiming his slot-machine betting was a business, a federal judge ruled.
Enrique Free Pacheco filed suit against the United States to recover more than $16.3 million that was withheld from his jackpot winnings in Las Vegas from 2007 to 2010, claiming that "he should be allowed to treat his slot machine wagers as business expenses."
Free, who considers himself to be a professional gambler, failed to present evidence that his trips to Las Vegas were only for gambling.
"The possible, but at best speculative and unreliable, income potential from slot machine gambling appears to have been a fringe benefit of an activity which provided him opportunities for adventure and family gatherings," U.S. Court of Federal Claims Judge Marian Blank Horn ruled.
Free testified at his deposition that he never had a written business plan, preferred gambling at high-limit slot machines, and thought of gambling as a hunt - all evidence that "suggests a gaming purpose that was more important than deriving a profit," the ruling states.
"It appears plaintiff, who lived off his other income, would be willing to take losses for years for the chance to get the 'deer,' regardless if, overall, plaintiff would not make a profit from his activities," Horn wrote.
Free, who retired in 2001, made about $10 million pesos per year as a businessman.
Free argued that because he was profitable in his gambling in 2009 and 2010, he should "benefit from a presumption that his activity was engaged in for profit."
Free's record keeping was inconsistent, however, and unclear to his profits, the ruling states.
"He appears to have been a savvy, successful businessman in his other moneymaking ventures, farming and stock market investing, in both of which it appears he evidenced consistent dedication for many years," Horn wrote. "The amount of time and sporadic nature of his gambling efforts further reduces the appearance of a business venture."