Gamblers Buy Losing Lottery Tickets on eBay for Tax Fraud

Gamblers are purchasing stacks of losing lottery tickets on eBay to fraudulently offset taxes on gambling winnings. While some sellers list the tickets as collectibles or materials for arts and crafts, other listings explicitly advertise the tickets as tax write-offs. Under Internal Revenue Service Topic 419, gamblers may deduct losses up to the amount of their winnings if they itemize and maintain accurate records.

Jeffrey Hoopes, an accounting professor at the University of North Carolina, characterizes the practice as tax fraud and notes that purchase spikes typically align with the April 15 tax filing deadline. This activity occurs as U.S. gambling rises and the federal government implements the One Big Beautiful Bill Act. This legislation reduces the deductibility of gambling losses from 100% to 90% starting in the 2026 tax year, creating taxable phantom income for gamblers.

eBay Inc. states that listings promoting improper uses of expired tickets are prohibited and will be removed, though it allows the sale of expired tickets with collectible value if the listing is transparent and complies with local law. The trend follows findings by the Treasury Inspector General for Tax Administration, which identified $13.2 billion in unreported gambling winnings between 2018 and 2020.