A new gambling tax law which goes into effect Jan. 1 is already beginning to take a toll on the industry. Unless Congress reverses a provision to July’s One Big Beautiful Bill (OBBB), the U.S. gambling sector is poised for trouble.
Key Takeaways
- A last-minute addition to the OBBB changed tax laws such that gamblers could be liable for taxes on money they do not win.
- The impending law change is already starting to impact the U.S. gambling sector, but there's hope for a resolution in 2026.
- While there are Congressional bills designed to reverse the new law, they may not receive the priority they need to proceed.
It was only after the passage of the OBBB when most lawmakers discovered a last-minute tax provision that would negatively impact the gambling industry. The provision limits the losses gamblers can deduct from their winnings from 100% to 90%. This change means gamblers could now owe taxes on money they, in fact, lost.
Nevada lawmakers acted quickly to seek a rollback of the pending law. Representative Dina Titus introduced the FAIR BET Act just days after the OBBB’s passage. Meanwhile, Senators Catherine Cortez Masto and Jacky Rosen introduced the FULL HOUSE bill. So far, there has been little movement on either bill, raising concerns throughout the gambling industry.
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Problems for poker’s crown jewel
In 2025, the 56th annual World Series of Poker (WSOP) attracted tens of thousands of players from all over the world. The WSOP is especially important to Las Vegas, as roughly a hundred tournament events are held over a seven-week period during the summer - normally the slow season for the desert gambling locale.
Most recreational players come in for a few days, taking a shot at one or two events.
Professional players, however, are there for the duration. They play dozens of events, bringing roughly six figures with them to cover their tournament buy-ins. But that could significantly change unless the new gambling tax law is reversed.
Erik Seidel, member of the Poker Hall of Fame, has won 10 WSOP bracelets and cashed in 151 WSOP events over his decades-long tenure, including seven this year. Seidel told the Nevada Independent, “Next year, I am kind of forced into retirement. Everyone who I’ve spoken to
plans on either cutting back or stopping. If you look at the top performers, most of them are from the U.S., and that’s just going to go away.”
Very concerned about the tax change next year. It’ll put me in semi-retirement. Open to any opportunities, especially if it involves traveling to new spots. DM here or on IG
— Erik Seidel (@Erik_Seidel) December 8, 2025
Poker won’t be the only casualty of the gambling tax change. Every legal gambling activity is vulnerable, from slots to blackjack. Sportsbooks, however, could end up being the hardest hit. In fact, they are already starting to see the impact.
Sportsbooks could be hit with double-whammy
With the Super Bowl and March Madness looming, sportsbook operators are already seeing a slowdown. Circa Resort and Casino CEO Derek Stevens said, “This could be fixed next year. The reality is that it needs to be done now. It’s already impacting wagering that goes into 2026.”
The problem for legal sportsbooks could get even worse, depending on the tax treatment of prediction market proceeds. Prediction markets started to offer sporting event contracts earlier this year. Lately, they’ve added prop bets and parlays - or combos - to their offerings. The tax provisions for prediction market sports contracts have not yet been determined.
It’s possible the IRS will treat the contracts like gambling wagers. It’s also possible they could fall under Section 1256 of the U.S. Internal Revenue Code and be taxed according to the generous 60/40 rule, whereby 60% of the gains are taxed at the much lower long-term capital gains rate. If that turns out to be the case - and the OBBB’s 90% loss deduction is not reversed - it could hamstring state-regulated sports betting.
Hope for a resolution in 2026
The timing of a reversal to the change is uncertain, but it needs to happen no later than April 2027 for tax purposes, a source told the Nevada Independent.
Rep. Mark Amodei, Nevada’s sole Republican in Congress, said he’ll work alongside Titus, a Democrat, to restore the old gambling loss deduction.
“We have been assured that when we wrap up this stuff in ’26 appropriations, that fix will be in there,” Amodei told The Nevada Independent.
American Gaming Association CEO Bill Miller said during a Dec. 12 appearance on the "Business of Betting" podcast that he hasn't met a congressperson who would oppose the reversal and believes the deduction will be restored to 100% early next year.
Most inactive Congress in decades
Reversing the change will require Congressional action, which is more of a long shot than it used to be. This year, Congress passed the fewest number of laws in decades, took weeks of unscheduled vacation, and allowed the longest U.S. government shutdown in history.
Titus recently wrote a letter to the Ways and Means Committee, requesting that her FAIR BET Act bill be added to the calendar. But she’s hardly optimistic, citing potential Republican opposition. Titus said, “They are reluctant to open up the Big Bad Beautiful Bill because they don’t want to challenge the President, and also, they know if they open it up, other people are gonna have other fixes, too.”
