Why is it insane? Its like winning the power ball and then blowing it all on scratchers. You owe taxes on the win but can't necessarily deduct the losses.
A better analogy might be blackjack. Let's say you are playing blackjack for an hour, and at the end of that hour, you're up $1,000. But you decide to play for another hour, and now you're down $1,000. You think you should still have to pay tax on the transient $1,000 win?