Losing lottery tickets at $575 per $90,000: the loss deduction now has a spot market

An eBay search for "losing lottery tickets" returns stacks of worthless scratch-offs and instant tickets, sold either by stated value or by weight ^[1]. That is a public price on a tax deduction, which means the substantiation behind gambling loss claims now has a spot market with listings, filters and seller feedback attached.

The inventory, as reported by Fortune: a pound of losing Pennsylvania tickets for $10 ^[2], Ohio tickets representing $5,200 in losses for $29.99 ^[3], and $90,000 of losing Florida tickets for $575 ^[4]. The Florida lot prices claimed losses at roughly 157 dollars of paper per dollar spent ^[5]. The Ohio lot is about 173 to 1 ^[6]. Most listings are dressed as collectibles or arts-and-crafts material, with "vintage," "rare" and "no value" doing the work ^[7]. Others skip the costume: "tax write offs" and "tax deduction" appear in listing titles that cleared eBay's filters ^[8].

Jeffrey Hoopes, an accounting professor at UNC's Kenan-Flagler Business School and research director of the UNC Tax Center, told Fortune the practice is "clearly tax fraud," and an unusual one in that you can buy it on eBay ^[9]. He also allowed that some buyers simply collect paper and would do so regardless of the deduction ^[10].

The rule is what gives the paper a bid. Gambling winnings from lotteries, raffles, sports betting, horse races and casinos are fully taxable and must be reported ^[11]. Under IRS Topic 419, losses can offset those winnings ^[12], but only for filers who itemize, only if they kept records of both sides, and only up to the winnings reported ^[13]. The IRS wants an accurate diary plus receipts, tickets, statements or other records ^[14]. A ceiling denominated in documented losses turns documentation itself into the scarce input, and scarce inputs get sourced. Note the limit of the record here: the material documents the market and the cap, not the size of any recent change to it.

eBay's stated position is that expired lottery tickets with collectible value may be listed if the listing says the item is expired and the sale is legal locally, and that listings promoting potentially improper uses are removed ^[15]. Its lottery ticket policy says the same ^[16]. Hoopes said eBay only facilitates transactions and never holds the inventory, and that he does not see the company being liable, while noting he is not a lawyer ^[17]. That leaves the enforcement burden on keyword screening, and the screening is demonstrably porous ^[8].

The demand side is getting larger. Americans wagered roughly $166 billion on sports alone last year, more than the film, music, book and museum industries generated combined, and that excludes lottery, casino and tribal play ^[18]. Combined monthly volume on Kalshi and Polymarket rose from under $5 billion in September 2025 to about $24 billion in April 2026, according to a Pew Research Center analysis ^[19], against the roughly $14 billion a month legal sportsbooks handled on average in 2025 ^[20], about 1.7 times the sportsbook figure ^[21]. During the summer's World Cup, prediction markets reached roughly 27% of legal U.S. sports-betting volume, up from 9% at the start of the year ^[22], with Kalshi briefly running near 10 times its early-2026 pace ^[23]. Every contract produces a winner and a loser, and every winner owes the IRS on the same terms as a lottery cash-out ^[24]. Fortune notes the agency's compliance record already suggests many winners do not report at all, citing a 2024 Treasury Inspector General audit ^[25].

Watch whether eBay extends screening from title strings to listing bodies and repeat sellers, whether any preparer faces penalties for accepting purchased tickets as a loss diary, and whether prediction-market operators issue winner reporting that makes the offsetting claims checkable.