Actually, brackets are taxable as misc income, but that does not make them gambling.  My bracket money gets reported to me on the same line as my other winnings from USBC and megabuck tourneys.  I file a Schedule C tax return listing bowling as my profession.  I am allowed to take all appropriate business deductions including entry fees against the bracket and/or regular tourney winnings.   I can only show net losses under very narrow circumstances, but anyone may attach a schedule C taking the position that bowling is a hobby which does allow you to offset entry fees.  One word of warning however.  You are required to pay self employment on your net income under this scenario.  Finally, don't blame the USBC.  The IRS started requiring them to report gross prizes quite a few years ago, and they are not allowed to report your winnings net of entry fees.     

Life is a gamble, so under that term brackets are gambling, but under most state law definitions that I am familiar with they would escape the legal term of gambling because the player has enough control over the outcome to take them out of the gambling category. 

Brunswick has the right to not allow brackets in their houses, but the gambling rationale is either an ignorant position, or a convenient excuse.

Good points.  That is why I said business deductions.  I tried to keep it simple, because my main point was that you have to file a schedule C to get any deductions. 

Since you are in the business you can get away with deducting much more than those that are just doing it as a hobby.  When I was bowling a lot my tax guy was a CFO and also a PBA member so he understood the expenses involved in bowling.  Keep good records for the year and always pay for the room and gas.  I've never roomed with anyone or carpooled as far as the IRS is concerned.  If you haven't been keeping mileage go back and make a log for all the tournaments you've bowled this year and google the mileage.  $.56 a mile adds up fast.

Radical in RI is involved in a bowling center. The rules are much different when your income comes from within the industry and not having to prove that bowling is more than a hobby.

You only are required to pay tax on the profit from bracket winnings, not the gross winnings. As a CPA, tax preparer, and bowler, I get this question every year. 

So, if three bowlers put up ten bucks each on a three game series, with the winner to take all of the thirty bucks, that's not gambling?  In what state?

No rake, based on skill...in many jurisdictions, that isn't gambling.  Much depends on how the precise definition appears in the Code FOR that jurisdiction though. 

By example, in Texas, the hypothetical meets two of the three required prongs for a defense to a charge of gambling, with the third being dependent on whether you can persuade a Court that, by virtue of the league's contract with the center, those lanes were "a private place" for the purpose of TPC 47.02. 

So, a wager placed on any skill based sports event would not be considered gambling in Texas. Neat.

Brackets are not totally skilled based. Much depends on who you are randomly matched up with.

The first prong is that it must be 'a private place.' Motion to suppress would surround that element of the equation.  From there, you get into rake or benefit to ANY person other than the persons involved in the wager and from there, the issue of 'but for skill or luck' all other things are equal.

And, in your scenario to which I responded, there was no randomness- it specifically said three people on a three-game series. 

All of this comes back to why I said one needs to know the language of the laws in the specific jurisdiction...what is legal on one side of a State line may be contrary to law a few feet away.  Everything in between is shades of gray.  Little about law is black and white- and it is in all those grey-scale tones that I get paid to dabble...