High Stakes, Higher Taxes: New Gambling Rules Unveiled

Money Explainers

Learn about the new 90% loss deduction cap impacting bettors. Discover how the tax change could threaten careers in wagering. Explore the debate over whether the new rule is a "stealth tax." #ProfessionalGamblers #TaxHike#GamblingTax

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00:00A little notice provision within President Donald Trump's S-900 page 1, Big Beautiful Bill,

00:06is sending shockwaves through the world of professional gambling and tax advisement.

00:10This seemingly minor line item could dramatically alter how bettors pay income tax,

00:16even when they break even. The measure caps gambling loss write-offs at 90%,

00:21a significant change that Congressional Scorekeepers Project will raise $1.1 billion

00:26over the next decade. Until now, gamblers in the US could directly offset their winnings dollar for

00:32dollar with documented losses. This meant, if you won $100,000 but lost $100,000, your taxable income

00:41from gambling was zero. Las Vegas CPA Zachary Zimbel has already heard from many clients expressing

00:47serious concern. He warns that at a 10% penalty and it eats a lot of their profit. The implications

00:54for professional gamblers are particularly severe. Rep. Dina Titus, a Democrat from Nevada

01:01and co-chair of the Congressional Gaming Caucus, has vowed to draft a fix, arguing that this language

01:07unfairly punishes individuals who are diligently reporting their gambling activities. Professional

01:13poker player Phil Galford illustrated the absurdity in a video, explaining that a gambler with a net

01:18income of $200,000 from $5.2 million in winnings and $5 million in losses would effectively pay taxes

01:27as if they made $700,000. He concludes, you can't be a professional gambler in the US if this goes

01:33through. This new tax regime comes at a time when legal gambling is experiencing a massive surge,

01:40driven by online heavyweights like FanDuel, DraftKings Inc., and Calci. Americans wagered a record

01:46$72 billion in 2024, a 7.5% increase from the previous year across sportsbooks, casino floors,

01:54and digital platforms. The timing of this tougher tax environment for bettors could not be more

02:00ironic. The gambling industry is expanding, attracting more participants, and now faces a

02:06significant hurdle that could deter professional play and make it harder for even casual bettors to

02:12manage their tax liabilities. This legislative change is poised to spark considerable debate

02:17and potentially reshape the landscape of legal gambling in the United States.

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