The McCain campaign claims Sen. McCain had no obligation to report gambling winnings on his personal financial disclosure reports.  That’s wrong; gambling winnings are earned income that must be disclosed.  It’s not even a close call.

Pages 33-34 of the Senate Ethics Manual (pdf available here) state “the staffer who appears on Jeopardy and becomes a grand champion may keep her prize money and other winnings as may the Senator who purchases the winning Powerball ticket.”  The manual continues, “Such winnings must be reported by disclosing individuals as earned income.”  What possible distinction can there be between lottery and game show winnings and money won at a craps table?

Second, some have suggested that because the IRS allows a person to net out his winnings and losses and report only the gain, the same rule must apply to personal financial disclosure forms.  Wrong again. The IRS rules are designed to determine a person's total income, but the Ethics in Government Act's disclosure requirements are designed to identify all of a Member's sources of income.  So under IRS rules, if Sen. McCain won $2,000 at the MGM Grand on Saturday and then lost it all at the Venetian on Sunday, he wouldn't have to report any net income from gambling.  Under the Ethics in Government Act, however, he would still have to report the $2,000 he won at the MGM Grand as income of more than $200 from a specific source.  Other members of Congress, including Sen. Judd Gregg (R-NH), House Minority Leader John Boehner (R-OH), and Rep. Paul Kanjorski (D-PA), all understand this rule and reported such winnings.  Former Rep. Bob Ney (R-OH), on the other hand, went to prison, in part, for failing to properly disclose gambling winnings on his personal financial disclosure form.