You can deduct gambling losses in any amount up to the amount of your winnings as deductions on Schedule A of your Federal return. They are not deductable for Massachusetts tax purposes, unless you are a "professional gambler" and file both state and Federal Schedule C (self employment), in which case you could also deduct expenses like bus fare to AC, etc.
In terms of your hypothetical, your odds of not being audited are about equal to your chances of winning $100M in the lottery. More modest winnings would have a lesser chance of audit. To avoid an audit, be sure you include ALL your 1099s from the lottery, Foxwoods, etc. on your tax returns. They do a computer match, which will pick up any you don't include, and may spark a broader audit by a human being.
I know of a case where a taxpayer "rented" losing tickets from a convenience store owner's waste baskets to support his deductions. Don't do it. The reason I know is that they both went to jail.