920303:

Heh! This is one of those rare times where I'm actually happy to be pretty much the only Certified Public Accountant that plays this game.

...

Finally, regarding your gift remark, keep in mind that Uncle Sam can only force you to pay taxes on something once. So, if you paid taxes on that dollar that you gave to a friend, then he's not obligated to pay taxes on it as well.

I know you're a CPA, but the idea that you can give someone else money and they don't have to pay taxes on it because "Uncle Sam can only force you to pay taxes on something once" is just wrong, for more than one reason.   First off, it's two different people paying taxes, not the same person. But let's just ignore that discrepancy for a second:
Contary example off the top of my head:  I make $10,000,000. I pay $4,000,000 in taxes. I die. My son inherets $6,000,000. He has to pay taxes on that.

There are also examples with certain kinds of investments and certain kind of corporate structures where you can get taxed twice.

And of course this all gets complicated when us foreigners start to participate in events... In Quebec, they don't tax prizes as long as they come from a "game of skill" instead of gambling... which is why in Quebec you always have these ridiculously easy "skill testing questions" to answer when you win a raffle or contest (usually some sort of really easy math problem). Since you can only win the raffle by "exhibiting a skill" instead of random chance, it's not taxable. Yeah... loopholes, gotta love em. It's also why all contests have 'no purchase required' (otherwise it would be gambling... paying money, for a product, in the hope that you'll win something). You could, technically, order entry forms for contests from, say, Coors Light without buying the product. Nobody ever does, though. Because even if people will fantasize about winning some nice prizes from buying their favorite beer, nobody thinks they have serious enough chances of winning to bother *actually* pursuing entry forms like that. It's funny that way. When it comes to actual costs in time (rather than a monetary cost you could rationalize away because you'd buy the beer anyway), most people are a bit more pragmatic about their actual chances of winning than you'd expect.

Games of chances are covered by Loto Quebec and taxes are thus already taken into account, as it's a government office. You can't do anything gambling related in Quebec without going through Loto Quebec, which had some repercussions in the earliest days of Magic tournaments in the region (they had to demonstrate it was a game of skill, not gambling, because some idiot claimed his money as income from 'organizing card game tournaments', which was... misinterpreted).

Poker pros are so affected by the wildly disparate laws regarding income taxes on gambling winnings that many of them pursue citizenship in other countries than their birth country, or even the countries in which they compete, just to 'shop' for the country that will take away the least from their winnings.