American Bettor’s Voice (ABV) responded to a One Big Beautiful Bill Act (OBBBA) provision that could impact professional gamblers by how deductions for losses are allocated.
Adam Robinson, an ABV board member, published a paper detailing how the OBBBA could hurt the pockets of professional gamblers while impacting the regulated U.S. gaming market. The paper, The OBBB Gambling Tax Provision: An Existential Threat to Regulated Sports Betting, details the potential consequences of the policy on bettors.
ABV is sharing its concerns regarding the OBBBA as a non-profit organization and advocate for sports bettors in the U.S. The organization, led by CEO Richard Schuetz, represents sports bettors nationwide and advocates for fair regulatory standards for gaming. ABV leadership also includes pro gamblers Gadoon “Spanky” Kyrollos and Billy Walters.
OBBBA’s impact on the gaming industry
The Senate version of the OBBBA changes how deductions for gambling losses are allocated. The act makes it possible for gamblers to be taxed on more than their net winnings. The OBBBA mandates that only 90% of a gambler’s total wagering losses in a taxable year should be allowed as a deduction.
ABV believes that the OBBBA’s gambling loss provision creates a “phantom income,” requiring certain bettors to owe taxes on money they actually never won from gambling.
OBBBA could hurt pockets across the industry
The OBBBA is projected to have a substantial financial implications for America’s gaming industry, especially given that ABV argues that 10% of bettors generate 80% of betting handle for the industry.
“The industry faces $18 billion in annual handle loss, $1.5 billion in gross gaming revenue decline and $420 million in state tax revenue reduction. More severe scenarios project handle losses exceeding $48 billion annually,” continued Robinson.
ABV projects significant revenue losses in New York, Illinois, Pennsylvania, New Jersey and Ohio behind customer migration from regulated platforms sparked by the OBBBA.
The organization reports a conservative estimate of $129 million in annual tax losses in New York, considering last year’s total betting handle, revenue and the state’s 51% tax rate.
A conservative estimate in Illinois projects an annual $41 million tax loss. The projection considers Illinois’ sliding scale tax structure and 2024’s handle and tax revenue from wagering. The estimate does not consider Illinois’ newly implemented per-wager tax.
The OBBBA provision could also impact the bottom line for operators with ABV projecting FanDuel to lose between $7.2 billion and $19.2 billion in total betting handle from bettors migrating due to the deduction requirement. DraftKings is estimated to have between $6.2 billion and $16.8 billion in handle at risk, while PENN’s deal with ESPN could be in jeopardy. ABV cites the ESPN Bet’s roughly 2.35% market share and the potential loss of customers as a reason for ESPN to invoke its termination rights on the $2.1 billion deal.
ABV wants to protect professional gamblers
“The American sports betting landscape stands at an inflection point,” said Robinson in the paper. “Yet this entire ecosystem rests on a foundation that few policymakers fully understand: the extreme concentration of betting volume among a tiny fraction of customers.”
The small fraction of consumers are professional and high-volume bettors who spend more than the average customer. ABV reports that Circa Sports, which offers sharp odds, high limits and a low hold, has 95% of its total betting handle derive from bets over $50.
“Professional bettors, who typically operate on thin margins with high volume, face economic devastation under these rules [OBBBA],” continued Robinson.
ABV also notes how the OBBBA makes a dramatic change to previous tax rules in the U.S.
The OBBBA nixes the Revenue Act of 1954’s requirement that taxpayers can only be taxed on net gambling income with losses fully deductible against winnings. The OBBBA removes that rule to generate an estimated $1.1 billion in additional federal revenue over eight years, according to projections from the Joint Committee on Taxation.
Gambling tax change could deter high-volume recreational bettors
ABV also believes the OBBBA impacts the entertainment aspect of gambling, particularly for high-volume recreational bettors who can drive the industry’s economics.
“The OBBB transforms this straightforward entertainment spending into a tax planning nightmare,” added Robinson. “These customers understand they’re paying for entertainment, but the concept of owing taxes on fictional income fundamentally alters the value proposition.”
The OBBBA’s potential impact on high-volume recreational bettors could also trickle down to operators. ABV considers high-volume recreational bettors more prone to stop betting entirely as they do not rely on wagering for income compared to professional gamblers.
“These high-volume recreational bettors provide the stable, predictable revenue that allows operators to offer competitive odds and absorb the occasional large wins from skilled players,” said Robinson. “Their departure would force fundamental changes to business models built around serving this affluent, entertainment-focused demographic.”
Gamblers may consider prediction markets
ABV fears the OBBBA provision will lead bettors to seek other options, including prediction markets, to bypass the change to gambling loss deductions.
“These customers have immediate escape routes: prediction markets regulated by the Commodity Futures Trading Commission (CFTC), which maintain 100% loss deductibility and operate under more favorable tax frameworks and offshore sportsbooks. . .,” continued Robinson.
Prediction markets are not subject to the OBBBA’s phantom income taxation, providing potential savings for both professional gamblers and high-volume recreational bettors. A professional bettor reported to ABV having spent more than $1 million through prediction markets, including Kalshi, during a college football Saturday earlier this year.
ABV also notes the widespread availability of prediction market platforms in the U.S. The accessibility to the platforms could also draw bettors from regulated sportsbooks.
“Prediction markets offer operational advantages that extend beyond favorable tax treatment,” continued Robinson. “CFTC regulation enables 50-state operation versus state-by-state licensing for sportsbooks. Age requirements drop to 18+ versus 21+ in most gambling jurisdictions.”
According to ABV, prediction markets also don’t limit winning players—a topic discussed by Kyrollos at an annual fall meeting with the Wyoming Gaming Commission last year.
Offshore sportsbooks are also poised to benefit from players leaving regulated platforms behind their elimination of a potential phantom income taxation.
