That's true. But most people will never be able to claim more then the standard deduction. So none of those losses will be claimed, but the one and only $600 or $1000 dollars you won at a tournament will raise your income.
I was pointing out how unfair it is. You should be able to deduct the losses from the winnings. If it is still a plus number, then it would get added to income.
The other option, and I am not a tax guy by occupation, but I do know a fair amount about the tax laws, is that if you play in enough tournaments to generate a positive income, but , yes it has to be considered more than a hobby by the IRS; I believe that you could set yourself up as a business, deduct all travel, equipment ( cues, cases, etc), entry fees, lodging, etc. to help offset much of your total tournament winnings.
A pro player should be able to deduct all of their expenses if they are reporting all of their income- I do not understand why someone like a Grady Mathews would have trouble doing this, during the times he held no other job except as a pool player, unless he had reported such small winnings that the income was deemed "hobby" income. Especially if he had a spouse with significant income that paid their living expenses and they were filing jointly.
However, for most amateurs, they just do not report any winnings , unless the IRS were to go that deep into the local amateur tournament circuits- not likely to happen, there are far bigger targets presently not reporting income.
My friend's landscaper was jailed for failure to report several hundred thousand in income, the guy cashed and sometimes deposited checks via friends and family at several different banks for a few years, but slipped up too many times in his sloppy " beat the IRS" scheme. The IRS also likes to pose as buyers of "cash" businesses, getting a peek at the "real" books and then dropping the tax hammer on the perspective seller.
There are so many underground economies right here in the U.S. based within several different ethnic origins - we all know certain groups of business ventures that are common among certain ethnic groups - without naming the groups or the business types. These groups not only generate huge cash sums untaxed, they also exist in an underground economy among their groups where rents, sales of commercial buildings, business supplies, commercial building repairs, etc. etc. are ALL done on a cash basis.
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