Trump’s New Law Slaps Gamblers With Hidden Tax Hike

Donald Trump’s signature new law, the one Big Beautiful Bill, is now law, but buried deep in the back third of this one-thousand-page monster lurks a very nasty surprise for gamblers.

Starting in 2026, gamblers will only be able to deduct 90% of their gambling losses against winnings on their taxes. And yes, that might include casual players who walk away from the casino at the end of the year, losing just a little, or worse, those who won just a bit.

Under the current gambling tax, you could write off your gambling losses up to 100% of your gambling wins. Online casinos, sports bets, or brick-and-mortar casinos didn’t matter. If you won $50,000 on the slots but lost it back, you weren’t on the hook for anything. But the new law might leave a player who broke even like this on the hook for taxable income.

In this case, you would only be able to deduct $45,000 and would be liable for 22% of the federal tax on that amount. You broke even and owe the IRS $1,100 on that $5,000 in phantom income.

While this might seem like a minor technical change, it could seriously affect players who only narrowly break even or lose slightly. Since most gamblers end the year with more losses than wins, the inability to deduct the full amount means some will still owe tax despite not making any real profit.

Professional Poker Players and Sharp Sports Bettors in the Crosshairs

But imagine you make your living from many low-margin player advantage bets. Say you are a very seasoned sports bettor. You won $600,000 on NFL bets last year, but you lost another $500,000 on them. In 2025, you can write off 100% of those losses and owe tax on your $100,000 in hard-won earnings.

But come 2026, you can only write off 90%, or $450,000, in losses, so now you owe 22% on $150,000 in supposed “winnings” and need to cough up $33,000 to the tax man. In all actuality, you hit a higher tax bracket around $93,000, but for simplicity's sake, we’ll stick with these numbers.

That might force some players back underground, whether that be offshore, unregistered sites down in the Caribbean, or just your run-of-the-mill bookies down at your favorite watering hole.

In any case, if enough people don’t want to pay what they feel is an unfair tax, there are certainly plenty of options available, so it seems a bit disingenuous to tax at a rate that disincentivizes anyone from participating, or worse, leaves bettors feeling like they are being taken advantage of.

The situation is even worse for professional poker players, at least the tourney players anyway. The cash games are likely to remain largely unaffected by this bill, at least for now.

But if you play dozens of tournaments a year and eke out a cash-out in two of them for $300,000, but lose your entry fees in another 36 of them for a total of $240,000, how will you feel when you don’t owe tax on just your $60,000 in winnings, but instead owe tax on an additional $24,000 in prize money you never saw?

What’s Being Done?

Nevada Rep. Dina Titus and California Rep. Ro Khanna are already pushing back, having filed the Fair Bet Act earlier this week to restore the full 100% deduction for gambling losses. Titus is also backing the SLOT Act, which would raise the outdated $1,200 threshold for W-2G jackpots, a number that has not changed since 1977.

Raising that limit would ease the reporting burden for both players and casinos and eliminate countless hand pays on minor wins. Many have proposed $5,000 as the new threshold, with annual increases tied to inflation.

It remains to be seen how much support the SLOT Act will receive. Still, a broad, bipartisan group of lawmakers from gaming-friendly states may rally behind it, as they have with similar efforts in the past.

The political fallout from the One Big Beautiful Bill has created a tense atmosphere on Capitol Hill, and some lawmakers may be reluctant to publicly challenge even minor provisions included in the sweeping legislation.