Yopu are supposed to keep detailed records and report ALL winnings AND losings to the IRS each year. The amount you are taxed on is your net winnings.
As for how the IRS "knows" about the money you've won *online*, I don't think they do. But if you decide not to report it, be careful. Tax evasion is a very big deal and it wuold be a very bad thing if you ever got caught.
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