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A private-letter ruling was recently issued by the feds regarding what a "gambling session" is. It is kind of specific to the lady who asked for it; she is a slots player, takes a fixed amount to each visit at a casino, and quits when she loses it. The important point for all gamblers is that it seems to define the end of a session as "when you cash your tokens in" and get money for them.
As it stands now, all gamblers, casual or professional, must declare as income ALL WINNINGS as part of their gross income on page 1 of the 1040 return, and deduct ALL LOSSES as an unlimited Itemized Deduction on Schedule A. Taken literally, that means every time 2-cherries come up on the slots or every time you beat the dealers hand at 21, that is "income". This is a very hard rule to adhere to, as you have to be writing down every one of these wins in a little notebook. Does anyone do this? Probably not.
There are several ways to interpret a "gambling session" that can reasonably adhered to. In slot machines, your win is what you get out of the machine as a paper voucher or hand pay from the attendant. Your loss is what you put into the machine in the way of cash or vouchers. In table games, it's not unreasonable to call your loss the amount(s) you buy into the game with (cash or marker). Your net winnings are what you leave the table with in the way of chips that you cash less the amounts you bought in for. Any extension of the meaning of the term "gambling session" is open to challenge by the IRS. Even if you take your chips and move to another table, even if you cash out a voucher and put it into another machine. What you can't do is arbitrarily net out your wins and losses for a trip, or a year, or an hour, or a day and report only the net gains.
However you handle the "beginning and ending of a session" question, be sure to keep some kind of written account of how your money gets into the casino's hands and back into your hands. Even if you think you have a net loss for the year, you may be challenged to prove that, particularly if you have one or more W2G's issued to you during the year.
And remember, you can't deduct gambling losses from any other kind of income... only from gambling winnings. You can't even deduct gambling losses from a Form 1099 that the casino gives you after you win a tournment or sweepstakes... that is ordinary income!
Finally, remember that some states collect state income tax even from non-residents of the state. The most notable are Mississippi and Louisiana. In Mississippi, the casino holds a certain percent from each W2G they issue you and you CANNOT get this back by filing a non-resident MS tax return! In Louisiana, they also withhold state income tax, but if you file the LA non-resident return, you can get back all but a few percent of the withheld amount (they keep around 3-4%). This is not a big issue for the casual player who never gets a W2G as nothing is withheld from his chips, tokens, or vouchers cashed but technically these states wants you to declare all wins and pay tax on them by filing a tax return.
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