The Trump administration’s signature spending package contains a little-known provision which could radically upend the gambling industry.
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.
But starting next year, under the new bill, which the president signed into law Friday, bettors can only deduct 90 percent of their losses from their declared income.
This sets up the potential for people to pay income taxes even if they ultimately came out of their bets at a loss.
Insiders warned the change could drive away professional and recreational gamers alike impacting tax revenue.
“Did anyone think this through?” Russell Fox, a Nevada-based accountant specializing in gambling, told The Washington Post. “They thought: ‘We’ll bury this somewhere in the bill. No one will see it, and now we’ve got $1 billion of income to offset $1 billion of tax cuts.’”
“This is bad long-term for the casino industry,” he added. “It’s bad for gamblers. It’s actually bad for the IRS, too. We need a less-complex tax system.”
Rep. Dina Titus, a Democratic congresswoman who represents Nevada, said earlier this week she would seek a “legislative fix” to the provision.
“This is just another attack on gaming and tourism and on districts like mine that rely on these industries,” she said in a statement to the Las Vegas Review-Journal. “This also punishes people who are trying to do the right thing by reporting gambling on their taxes, pushing them towards offshore outlets and the predictions market, which unlike legitimate gambling sources, do not invest in bricks and mortar, pay state taxes, hire union labor, or contribute to problem gaming efforts.”
Professional gamblers have also warned about the impact of the provision.
“This new amendment to the One Big Beautiful Bill Act would end professional gambling in the U.S. and hurt casual gamblers, too,” poker player Phil Galfond wrote on X on Tuesday. “You could pay more in tax than you won. Contact your representative quickly.”
Others suggested the provision could push gamblers away from casinos and traditional sports books to online prediction markets such as Kalshi, which in practice often function like gambling but are regulated and taxed differently.
Sports betting is legal in 38 states, Washington, D.C., and Puerto Rico.
The gaming industry brought in a record high of nearly $72 billion last year, according to the American Gaming Association.
