At Nevada's legal sports-books, bets are placed on the NCAA tournament not only by filling out the popular brackets but also on the outcome of each game. You also can place "prop," or proposition wagers, on such things as who will sink the first and last shots or foul out first. Essentially, if it happens (or could happen) in a game, the Nevada sports-book operation will take a bet on it. And because the tournament goes on for weeks, bettors have many more ways to drop some money on a game or games.

The tax man has a way to track legal athletic wagering. It's a dicier tax-collection proposition, however, when it comes to bets placed at increasingly popular offshore sports-betting operations, dollars dropped into friendly office pools and illegal wagers handled by bookies. These bets, according to the American Gaming Association, represent more than 99 percent of all sports betting nationwide. The National Gambling Impact Study Commission estimates that translates to as much as $380 billion annually in illegal wagers.

For whom the tax bells toll
Legal betting operations -- state lotteries, casinos and horse racing tracks -- are regulated. One of the government agencies that has a say in these operations is the IRS. As soon as the bells go off when someone hits the slots jackpot, a casino representative is on hand to the get winner's tax information.

In some cases, Uncle Sam even gets his cut (25 percent on most winnings) before you get your payout. That's the case for winnings of more than $5,000 from any sweepstakes, wagering pool or lottery; withholding also is collected on proceeds that are 300 times or more the amount of the bet. Gambling winnings from bingo, keno and the slots are not generally subject to withholding, but you're still required to provide your tax ID. If you refuse, the casino can assess backup withholding of your jackpot at a 28-percent rate.

Last year, the IRS also started getting reports from poker tournament sponsors when tournament winnings exceeded $5,000. The reporting requirement, aimed at poker tournament sponsors, including casinos, helps the IRS ensure that card-game winners are including their winnings on their annual tax returns.

Those poker tourney winnings, along with your jackpots from the casino or horse track or lottery dealer, will be recorded on Form W-2G showing how much you won and how much, if any, was withheld for federal taxes. And like all other income reporting forms, a copy will go to the IRS.

But there's a distinction between what's reportable and what's taxable.