Bettors May Be Paying More Taxes on Sports Betting in 2026

The White House’s “big beautiful tax bill” has been a hotly debated topic in Washington, D.C; however, few have discussed its impact on sports betting in the US. 

The US House is currently reviewing the bill after it was passed by the Senate earlier this week. One of the topics currently being discussed among lawmakers is the change in how sports betting would be regulated. Currently, the bill proposes a change in how sports bettors can deduct their losses. 

Under the current system, a bettor who loses over a year won’t owe any taxes. Winnings are taxed, but many bettors have so few that they don’t qualify.

If the bill is passed, it would cap sports betting deductions at 90%. That means if a bettor wagered $50,000 and lost all of it, they would still be taxed as if they won $4,500. That is a massive change, and some lawmakers are concerned about the impact it could have on the industry.

The White House is pushing to have the House pass the bill by July 4, meaning a final result should be available soon.

Is Sports Betting in Danger?

One reason the tax change hasn’t been a major talking point is that it won’t significantly affect many bettors. Most bettors won’t lose enough money to worry about the impact of this change. However, the sharps and big-money bettors will. If the bill is passed, some fear that they might give up on the industry, or simply seek out unregulated sportsbooks to avoid the potential tax hit.

If the big-money bettors and sharps start to exit the regulated sports betting industry, it would have a trickle-down effect on all bettors. Lower payouts, fewer promotions, and other consequences could follow as sportsbooks look to cover the loss of their biggest bettors.

The White House is also behind a push to protect sports prediction markets. These controversial platforms provide an unregulated means of betting on sports and circumvent paying the same taxes on winnings. Most states have organized opposition to these markets over fears that they will slash tax revenue generated by the industry.

With top lawmakers backing both efforts, it appears the sports betting industry may be at risk of losing revenue over the coming years.