Yes, gambling winnings count as income according to the IRS. I think you misunderstood me about the state income tax.

Most state's have a state income tax that must be paid by residents on top of the federal income tax. A few states such as, Texas have no state income tax at all. I think our sales tax is a little higher here in Texas to compensate for the lack of a state income tax.

Note however, that the IRS has no way to access pokersite's records to see exactly what your income is. If they decide to audit you though, they can utilize the paper trail from your banking institution to deduce your income.