Professional gamblers and tax advisers are warning that a little-noticed line in Senate Republicans' 900-page "One Big Beautiful Bill" could make bettors pay income tax even when they break even.
What Happened: According to a Bloomberg report, the measure caps gambling-loss write-offs at 90%, a change congressional scorekeepers say will raise $1.1 billion over the next decade.
Page 38 of the bill's Joint Committee on Taxation draft amends Internal Revenue Code Section 165(d) so "losses from wagering transactions shall be deductible only to the extent of 90% of such losses," leaving the final 10% fully taxable.
Until now, gamblers could offset winnings dollar-for-dollar with documented losses. A Senate GOP aide said the limit "aligns wagering with other itemized deductions," but critics call it a stealth tax hike.
"I've spoken to many clients and they're very concerned," Las Vegas CPA Zachary Zimbile said to Bloomberg. "Add a 10% penalty and it eats a lot of their profit."
Rep. Dina Titus (D-NV.), co-chair of the Congressional Gaming Caucus, vowed to draft a fix, saying the language punishes people who are trying to do the right thing by reporting gambling on their taxes.
Why It Matters: Gamblers flooded X and betting forums urging lawmakers to scrap the cap. In a video posted to X, professional poker player Phil Galford explained that a gambler who won $5.2 million in a year and lost $5 million, for a net income of $200,000, would pay taxes on actual winnings plus 10% of the losses.
"You would make $200,000 during the year," he said. However, "you would pay tax as if you made $700,000, meaning in almost everybody's case you would pay more tax than you made during the year. Completely untenable. You can't be a professional gambler in the U.S. if this goes through."
Online heavyweights such as FanDuel (NYSE:FLUT), DraftKings Inc. (NASDAQ:DKNG) and Kalshi have driven a surge in legal gambling just as lawmakers advance a tougher tax regime on bettors. Americans wagered a record $72 billion in 2024, 7.5% more than in 2023, across sports books, casino floors and digital platforms.
Photo Courtesy: MAYA LAB on Shutterstock.com
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