Massages May Feel Nice, But Can You Deduct Them at the Poker Table?

Last week I had an inquiry that asked me about deducting massages at the poker table. At many poker rooms and major poker tournaments, you can get a massage; the cost ranges between $1 and $3 per minute (plus a gratuity). If you’re playing an event like the World Series of Poker, where the chairs are (to put it kindly) not the greatest, a massage might make you feel quite good and ready for a few more hours of play. The question arose whether a massage while playing is tax deductible for a professional gambler.

Porfessional gamblers, unlike amateurs, are allowed to deduct all ordinary and necessary business expenses; that’s codified in IRC § 162:

(a) In general
There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business….

The Tax Court has looked at this many times; for example, in Lychuk v. Commissioner (116 T.C. No. 27),

The Treasury regulations specify that ordinary and necessary business expenses include “the ordinary and necessary expenditures directly connected with or pertaining to the taxpayer’s trade or business”, sec. 1.162-1(a), Income Tax Regs., such as “a reasonable allowance for salaries or other compensation for personal services actually rendered”, sec. 1.162-7(a), Income Tax Regs. The Supreme Court has explained that a cash method taxpayer such as ACC may deduct an expenditure under section 162(a) if the expenditure is: (1) An expense, (2) an ordinary expense, (3) a necessary expense, (4) paid during the taxable year, and (5) made to carry on a trade or business…The Supreme Court has stated that a necessary expense is an expense that is appropriate or helpful to the development of the taxpayer’s business…and that an ordinary expense is an expense that is “normal, usual, or customary” in the type of business involved, [internal citations omitted]

So where does a massage lie? Well, a poker player could argue that massages make long sessions more bearable; that they help a player concentrate; and that they make a player feel better. Those are all true, of course, but it it helpful for developing a poker player’s business? What would happen to the player if he did not have the massage? And therein lies the rub.

The IRS would argue that most poker players do just fine without a massage; that it is a luxury; that it is not necessary for a poker player to play; and that they involve elements of personal pleasure making them nondeductible personal expenses. Unfortunately for poker players who like massages, the IRS would almost certainly prevail on one or all of these arguments.

It’s hard to imagine a massage that doesn’t involve elements of personal pleasure. Indeed, that’s the reason poker players get massages (to feel better during a long session). The problem lies in that the Tax Code does not allow deductions for personal expenses. I know the manager of a spa here in Las Vegas. She stated that her business is a “…luxury, one that is not necessary. We want our customers to feel good and better.”

So we come back to the original question: Can a poker player take a tax deduction for a massage at the poker table? The answer is that it is almost certainly a personal expense that is not deductible.

4 Responses to “Massages May Feel Nice, But Can You Deduct Them at the Poker Table?”

  1. [...] Critical Question: Massages May Feel Nice, But Can You Deduct Them at the Poker Table? (Russ [...]

  2. Mike Stein says:

    Hi Russ,

    What if a player were to pay for a massage out of his or her chip stack in a cash game, a la drink service or other incidentals?

    I’ve seen elsewhere that, if a cash game player pays a few bucks off of his stack for something like a drink, he can ignore this and go onward, effectively “deducting” the drink cost from his eventual session win/loss without treating it directly as a business expense, rather than actively keeping tally of how much he’s taken off of his stack for drinks and reconciling it later.

    Would the difference between this and a massage be that the cost of the massage is often much more significant than the cost of a drink?

    • Russ says:

      Well, the massage itself isn’t deductible, but as you correctly point out paying for a massage with chips, and including the payment as part of your net win (or loss) for that session is an effective means of deducting the massage. Sure, it’s not deductible and a poker player is supposed to add back the massage, but I wish the IRS lots of luck on finding that out.

      If a poker player purchases a drink with chips while playing he’s supposed to add the cost of the drink back in, increasing his win (or lowering his loss).

      Eventually, I suspect that if this became a big enough issue tax agencies would pressure casinos to not accept gambling chips for anything but gambling activity. I doubt that will happen, so for now a cash game player has a means to take the deduction…though he’s not supposed to.

      • Mike Stein says:

        Thanks for the clarification, Russ. I didn’t realize that buying drinks was something that players were not supposed to do (independently of the ease, convenience, and undetectability of doing it). I had heard that it was an acknowledged acceptable thing by the IRS. I’ll update the 2+2 sticky with that, too.

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