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A couple factoids from the
IRS Website:
Gambling winnings. You must include your gambling winnings in your income on Form1040, line 21. If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.
Illegal income. Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
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This sounds like a solution for the deductible problem or for people who know how much they've won but don't have specific logs or total win/loss figures. You can just treat it as illegal income since, well, it is.