Many do. They will play at least sometimes in venues (online especially) where their winnings will be tracked, and they can deduct many of their expenses legitimately.
Do they all fully divulge all their earnings from in-person games? Probably not and many do have run-ins with the IRS, but they are likely to do a better job tracking their cash flow and potential tax implications than you give them credit for.
As alluded above, regular lottery players probably don’t take taxes into consideration, but they should.
For an individual bet? Probably not. Which is not really the equivalent of a powerball ticket. The equivalent would be closer to a playing session, for which they should.
My view is that every bet is an independent taxable event. If you do the math ignoring tax and figure your EV is $1.10 per dollar bet, but your actual profit from winning is more like $1.05, well, you’ve overestimated the EV by nearly half.
If applied to every bet over the course of a busy year, and assuming average luck, so the outcomes closely model the EVs, I beleive that the final result would be that a gambler who thought he made a profit versus his costs would be correct until he paid his annual tax bill. At which point he would discover he lost money that year. Oops.