One, Big, Beautiful Bill: Gambling Tax Changes Explained
Things are about to change for US gamblers and those working in the industry. The highly controversial One, Big, Beautiful Bill included a gambling tax set to create quite a stir, with repercussions that will affect bettors’ bottom line.
Gamblers who profit throughout the year may lose money come tax season. Will these changes impact you? I’m going to break down the gambling tax in the One, Big Beautiful Bill, and what you can anticipate in the near future.
Overview of Trump’s Gambling Tax Provision
A gambling tax provision quietly tucked among the 900-plus pages of the One Big, Beautiful Bill is about to have major effects nationwide.
Starting in 2026, gamblers can only deduct 90% of their losses, a sharp pivot from the previous 100%. The change means that gamblers will pay more taxes, even if their losses exceed their wins.
The reasoning behind the tax provision isn’t known. None of the Senate Finance Committee senators could say where it came from.
A Democratic source suggested it was added to compensate for the 2017 Trump tax cut, which increased the federal deficit by over a trillion dollars.
Whatever the purpose, the changes are projected to generate $1 billion for the government over the next ten years. That is, if gamblers don’t take their money elsewhere.
Changes to Deductions and Reporting
All wins in online gambling are considered income and therefore subject to taxes.
Before the new provision, gamblers could itemize their losses and deduct 100% up to the amount they won, allowing them to avoid taxes on a break-even or losing year. For example, if a player won $100,000 and lost $100,000, they paid no income tax since they earned zero income.
Not anymore, according to the Big, Beautiful Bill. The 100% tax deduction on gambling losses has been reduced to 90%, meaning 10% of losses will get taxed as income.
If a player won the same $100,000 and lost $100,000, they’re now taxed on 10% of that loss, even though that’s money they didn’t get to keep.
This creates the potential for scenarios where gamblers are paying taxes on “phantom” income, which is bound to alter the gambling landscape in the US.
Key Updates in the Tax Rules for Gamblers
- Gamblers will now only be able to deduct 90% of their losses.
- The provision lumps gambling expenses in with the 90% deduction rate.
- These changes only apply to those who gamble enough to itemize their deductions.
How These Changes Impact Gamblers?
The bill will specifically impact those who itemize their gambling losses. Some bettors may not lose enough to bother with itemized deductions, in which case, the standard deduction rate will still apply. However, those who wager professionally will be hit hard.
Not only does the deduction on losses change, but also the way gambling expenses are taxed.
Before the provision, professional gamblers could deduct their expenses in addition to their losses. Say a pro won $1,000,000, lost $900,000, and had $50,000 in gambling expenses. They would get taxed on the remaining $50,000 they had left.
Now, expenses are lumped under the new rate, meaning they could only deduct 90% of $950,000, or $850,000.
Instead of getting taxed on $50,000, they would have to pay taxes on $150,000. This ruling does not impact casual gamblers; only professionals can deduct expenses.
With these changes, high-stakes gamblers, especially those with narrow margins like sports bettors, could struggle to turn a profit.
Implications of the Tax Changes on the Gambling Industry
A hit to professional bettors is a hit to the gambling industry, and both are bracing for impact in 2026. Casinos and sportsbooks rely heavily on high rollers to generate much of their profit.
Gamblers nervous about the tax changes might start taking their business out of the country, which could have devastating consequences on those who work in the gambling industry.
Not only could it bleed the job market, but it could also have a rippling effect on the economic benefits that states pull from gambling revenue.
In 2024, Nevada generated $15 billion in gross gaming revenue, Pennsylvania brought in $6.8 billion, and New Jersey $6.2 billion.
States use these funds for crucial services like statewide education programs, transportation infrastructure, community improvement grants, and support for seniors.
If high rollers and professional gamblers start betting outside of the US, funding for these services may decrease.
Offshore Gambling: The Possible Resurgence
With the tax provision looming, pro gamblers have very few choices: quit or look for alternative markets. There is likely to be a subsequent exodus to offshore gambling sites, which aren’t required to report winnings to the IRS.
While playing at offshore casinos is a legal grey area and a perfectly viable option for many Americans, failing to report winnings is blatantly against the law.
All gambling winnings, whether collected on US soil or not, must be reported. Of course, many find ways to skirt around this legislation, whether through anonymous crypto banking or structuring transactions.
Despite the potential consequences, some gamblers will undoubtedly take the risk.
Opinions on The One Big Beautiful Bill Gambling Changes
Tax professionals, gambling industry experts, and senators have been weighing in on the potential repercussions. Here’s what they have to say:
“It’s going to devastate the Nevada economy. The professional gamblers bring a lot to that economy. Gambling operates by the 80/20 rule, maybe 90/10. Ninety percent of the business comes from 10 percent of the players, the VIPs.”
Nathan Goldman, CPA, and North Carolina State University tax professor.
“It will disincentivize professional gamblers like players at the World Series of Poker from doing what they do best and contributing to our economy. It will move major events that drive our economy offshore and push wagering into illegal markets.”
Senator Catherine Cortez Masto (D-Nevada).
“There could be scenarios where folks have a tax liability that matches or exceeds the amount that they earn.”
Garrett Watson, Director of Policy Analysis at the Tax Foundation.
What Pro Gamblers Need to Do
For those already experienced with itemizing losses, not much will change in the way of reporting. But for gamblers new to the process in 2026, here’s what you need to do to prepare for tax season in 2027.
- Always use a player card at land-based casinos so there is a record of your activity.
- Keep a detailed diary of all your wins and losses throughout the year.
- According to the IRS, your diary should include:
- The name and address, or location, of the gambling establishment.
- The date and type of your specific wager or wagering activity.
- The names of other persons present with you at the gambling establishment.
- The amount(s) you won or lost.
- Additional documentation such as: winnings and losses through Form W-2G, Certain Gambling Winnings Form 5754, statement by person(s) receiving gambling winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of winnings or payment slips provided to you by the gambling establishment.
- Utilize spreadsheets to stay organized.
- Obtain a win/loss statement from any online casino you play at.
- Remember, you’re not exempt from reporting your winnings if you play offshore.
- Hire a CPA if you need help.
A Fight to Bring Back the Full Deduction
Lawmakers are already trying to reverse the 90% rule. A new bill called the FAIR BET Act, led by Rep. Dina Titus (D-Nevada), would bring back the full 100% deduction for gambling losses.
The bill aims to correct what many are calling an unfair tax on phantom income. Backed by the American Gaming Association and several high-profile legislators, the FAIR BET Act could roll back the controversial provision before it ever takes effect in 2026.
Be Prepared!
The Big Beautiful Bill gambling tax provision will change how losses are taxed, impacting high-stakes and professional gamblers across the US.
The percentage that gamblers can deduct on losses and expenses is dropping from 100% to 90%, forcing some players to pay taxes on income they never received.
Experts are worried the shift could push gamblers to turn to offshore markets, negatively impacting the economic benefits their business provides.
While these changes won’t likely affect casual gamblers, serious bettors need to make arrangements to comply with the new law in 2026. It’s time to start keeping meticulous records of your gambling activity, and when in doubt, contact a CPA.
