A version of the One Big Beautiful Bill Act (OBBBA) could heavily impact gamblers’ wallets.
The Senate version of President Donald Trump’s tax and spending bill calls for a change to how deductions for gambling losses are allocated, making it possible for gamblers to be taxed on more than their net winnings. In the U.S., the IRS considers gambling winnings taxable income with winnings over $5,000 subject to a flat 24% tax rate.
The latest iteration of the bill mandates that only 90% of a gambler’s total wagering losses in a taxable year should be allowed as a deduction. Gamblers in the U.S. are currently allowed to deduct 100% of losses from gambling if the losses don’t surpass their winnings for a given tax year.
To use a basic example, if you won $10,000 and lost the exact same amount in one tax year, you would be taxed as if you won $1,000 even though you broke even at $0. Ultimately, if a gambler posted slim net winnings in a year, their gambling tax bill could be significantly larger than the pile of money they actually made.
The proposed deduction change also includes “any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” The special rule applies to expenses related to gambling, which can include a range of things including data-driven research tools and platforms.
Professional poker player and Rush Street Interactive partner Phil Galfond detailed on X how the bill impacts professional gamblers:
According to estimates from the Joint Committee on Taxation, the bill is projected to generate over $1 billion in additional revenue from gamblers over an eight-year period, equating to around $137.5 million per year.
Don’t poke the bear
As illustrated by Galfond, the bill is receiving backlash from lawmakers and key stakeholders in gaming.
“Buried within the BS Republican Budget bill is a provision that harms poker players and those who gamble by limiting loss deductions,” said Nevada Rep. Dina Titus in a post on X. “I’m working on a legislative fix that fairly treats gaming losses in the tax code.”
Unabated Sports co-founder and professional gambler Captain Jack Andrews also voiced opposition to the bill as it requires losing bettors to owe money on their gambling.
“I say this sincerely: This will implode the entire gaming industry,” said Andrews on X.
The OBBBA was approved on Tuesday by Senate members by a 51-50 vote, with Vice President JD Vance breaking the tie. The bill has hit the desk of House members, who must pass the measure once again after it underwent amendments after initially being approved by the chamber in May.
If that happens and it is signed by Trump, the tax change would go into effect in 2026.
