Gamblers sound alarm over $1 1B tax hike in Trump’s Big Beautiful Bill

While professional gamblers are likely to feel the brunt of the new rule due to the scale of their activity, amateurs with high-volume play could also be affected in years when they have significant wins and losses. Under current law, gamblers are allowed to deduct 100% of their losses, up to the amount of their gambling winnings. But the final version of the legislation — set to be signed by Trump during a White House ceremony Friday — modifies that rule. Although this update may have been unintentional, it has been broadly praised within the gambling community as a necessary modernization of outdated tax reporting rules.

• You’ve probably read and heard about it already, but, in short, moving forward, gamblers will only be allowed to deduct 90% of their losses.
• If your gaming revenue is high, you will be able to service all company costs, keep staff happy, and have the funds for future investments.
• Alterations in tax regulations can necessitate players to reconsider their betting strategies and risk appetites due to shifts in betting limits.
• An audit highlighted several deficiencies, including ONJN’s failure to monitor licensing and tax payments, as well as lapses in implementing a 2% monthly participation fee for online gambling introduced in 2019.
• If a bettor were to win $1.1 million and lose $1 million in a year, for example, their taxable profit would increase from $100,000 to $200,000, a 100% increase from 2025 to 2026, assuming the same finances.

Easy accessibility of gambling products increases the risk of uptake. Opportunities to gamble are often disproportionately located in areas of higher disadvantage. High-intensity products including EGMs, high-speed wagering platforms, and casino games, including online versions, are readily accessible almost anywhere. In practice, for example, under the old rule, someone who wins $100,000 and loses $100,000 could deduct the full $100,000 in losses and owe nothing.

Smaller wins under $1,200 aren’t taxed by the state (though federal tax may apply). Under the new tax law, starting in 2026, individuals can only deduct 90% of their gambling losses up to the amount of their winnings. That’s a change from the previous rule, which allowed gamblers to deduct 100% of their losses, up to the amount they won.

Your Responsibility: Report Everything (Yes, Even That)

In 2018, the Supreme Court gave U.S. states permission to legalize sports betting. To claim winnings and losses, it is incumbent for you to keep a diary or gaming log. Since you might not know how this is done properly, let’s take a look at what is required. GGR and NGR provide valuable insight into how well your online casino business is doing. As you saw above, these two performance-related metrics are similar, but they are not the same.

The Role of Gambling Operators and Taxes

Vermont does not automatically withhold state tax from gambling payouts at casinos or lottery (the VT Lottery will send you a W-2G for big prizes, but they don’t take state tax out at the claim center). Nebraska taxes gambling winnings and arguably hits certain winnings quite hard. But for casino gambling winnings, Nebraska law imposes a flat 5% state withholding on any gambling win that triggers a federal W-2G (generally $1,200+ on slots or $5,000+ on lottery).

Lowering the deductibility threshold to 90 percent satisfied the Byrd Rule. The original House-passed reconciliation bill, which did not have to comply with the Byrd Rule, did not include this provision. Those seeking to better control or cease gambling should be provided with tools to support them. These include universal pre-commitment (requiring people to set binding limits of time and money spent gambling) and self-exclusion (allowing people to ban themselves from gambling providers). Prevention is the most cost-effective strategy for minimizing gambling-related harm.

Tax Status: Hobby or Business?

If you travel to Casino uden Rofus gamble, be aware that other states’ taxes could apply, but Texas will not tax income from any source since it has no income tax. South Dakota has no state income tax, so it does not tax gambling winnings. This is one reason Deadwood’s casinos and other gaming in SD are attractive – aside from federal taxes, your winnings are yours to keep. Poker tournament winnings have a $5,000 minimum (reduced by the wager or buy-in).

Even if no tax is withheld upfront (for instance, you won a smaller amount), you still owe federal tax on all your gambling winnings when you file your return. Professional poker player Phil Galfond took to X to discuss how a gambler who earns $200,000 in a year might have $3 million in winnings and $2.8 million in losses. However, in 2026, the $2.8 million in losses is limited to $2.52 million in deductions, resulting in paying taxes on $480,000 in income for the same taxpayer. Depending on the taxpayer’s federal and state and local tax rates, they may have a substantially smaller income or even potentially a loss once taxes are paid. Simply put, many who previously relied on gambling as a profession may no longer be able to do so, as the house edge on a bet, combined with tax liabilities, will make it difficult to turn a profit from these activities. Tennessee does not tax personal income (apart from interest/dividends which were taxed under the Hall Tax, now repealed).

Along with numerous law changes that I identified in a prior Forbes article, one specific provision looms large for the gambling industry. Starting in 2026, professional and amateur gamblers alike will only be able to deduct 90% of their losses, resulting in many gamblers, whether they win, lose, or break even, owing taxes on their gambling activities. This article discusses that provision and what gamblers need to consider as they engage in these activities after these specific One Big Beautiful Bill Act’s provisions become effective in 2026. Professional gamblers, unlike casual players, report their earnings as self-employment income.

By recognizing the continuous evolution of gambling taxation, players can better comprehend the various considerations that affect their decision-making processes. Previously, gamblers could deduct all their losses from their declared income, while still having to pay taxes on their winnings. As a result, bettors were only taxed if they walked away from the table with a net profit.

All gambling winnings, even if they are as smasll as one dollar, are considered taxable income. Another common misconception is that only winnings from casinos or sportsbooks are taxable; however, any winnings from social or private games should also be reported. France taxes lottery winnings above a certain threshold but does not tax casino winnings. Germany generally does not tax gambling winnings unless they are from a professional gambler. Sweden revamped its gambling regulations in 2019, including introducing a licensing system that taxes the operators rather than the players. Gambling taxes are levies imposed by governments on casinos, betting pools, lotteries, and even players’ winnings, depending on the jurisdiction.

As fiscal regulations adapt to societal needs, players should expect ongoing modifications that may impact their gambling experiences. Being proactive in understanding and accommodating these changes will be crucial for players seeking to optimize their engagement in the realm of gambling. Beginning in 2026, only 90% of losses will be deductible, meaning some gamblers could owe taxes even when they break even or incur a net loss.

As you can see, staking activity can create some tricky tax situations. I haven’t heard whether the World Series of Poker will change its policy regarding partnerships for 2012. The casino withholds 30% of the $90,000, pays the stakee $73,000 (70% of $90,000 plus $10,000 entry fee), and issues to the stakee a Form 1042-S reflecting amounts won and withheld. In Germany, a recent report (Gambling Atlas of Germany 2023) estimates that 1.3 million people (2.3% of the population) have a gambling disorder.