Some American gamblers could see significant tax increases due to the sweeping “Big Beautiful Bill” Congress passed last week.
Key takeaways
- The "Big Beautiful Bill" limits gambling loss deductions to 90% starting in 2026, potentially increasing taxes for professional and high-stakes gamblers who itemize deductions.
- Repeal efforts are underway, with the Fair Bet Act aiming to restore the full 100% deduction, though its chances are uncertain in a GOP-controlled Congress.
- The change may push high-stakes bettors toward alternatives like prediction markets, possibly weakening regulated sportsbooks and sparking future legal and regulatory battles.
Ahead of scheduled implementation in the coming tax year, here are the most significant impacts and potential changes that may take place in 2026.
Repeal efforts underway
Multiple Congress members already introduced legislation to repeal the tax changes.
Instead of a 90% cap on deductions from gambling losses against wins passed in the BBB, a proposal from Nevada Rep. Dina Titus and California Rep. Ro Khanna restores the original 100% deduction.
“No one should have to pay taxes on money they didn’t win,” Titus wrote in a tweet last week.
I just introduced the FAIR BET Act with @RepRoKhanna to rightfully restore the 100% tax deduction for gaming losses.
— Dina Titus (@repdinatitus) July 7, 2025
I encourage other members to support this critical fix.
The more significant question is if this amendment passes before the tax change’s scheduled Jan. 1, 2026 start date.
Congress typically approves technical “corrections” to large pieces of legislation such as the BBB, which changes tax rates, funds border security initiatives, increases the federal debt ceiling and a host of other provisions. The Fair Bet Act Titus and Khanna introduced will be among alterations lawmakers consider in the next six months.
It’s no sure bet it passes. The gambling loss deduction decrease was intended to help offset federal revenue losses from tax cuts included in the BBB. Lawmakers may be remiss to lose more funding, especially from a “vice” industry such as gambling.
Titus and Khana are both Democrats, which could further hurt the Fair Bet Act’s chances in the Republican-controlled House and Senate.
Las Vegas casino owner Derek Stevens, who hosted President Donald Trump at one his properties during one of Trump's first public appearances in his second term, as well as the American Gaming Association, which praised the Fair Bet Act in a statement, pushed for the deduction restoration.
The question remains if Republican politicians support the changes just weeks or months after including the 90% rate in the new bill.
What happens if new deduction limits remain?
The “good” news for most bettors is it likely won’t have a direct impact on their bottom lines.
Most taxpayers, including gamblers, won't have to pay more in taxes, at least directly. The change comes to those who itemize deductions, a small subset of U.S. taxpayers. The BBB also included an extension of provisions from the 2017 Tax Cuts and Jobs Act, passed during Trump’s first term, that increased the standard deductions for taxes, making it less likely a taxpayer would opt to itemize deductions.
All gambling income is supposed to be reported, but most bettors who win small amounts of money don’t report their winnings. Larger wins, usually around $1,000 or more depending on bet size and game type, require the providing casino or sportsbook to file a separate tax form with the IRS. This doesn't change in the BBB.
Still, the deduction changes could impact high rollers and professional gamblers who are now set to see a significant tax increase.
Here's the actual language in the bill about to pass the House that has so many professional and recreational gamblers upset because they can no longer completely offset losses, leading to some unintended (or not) consequences. pic.twitter.com/MWpTHHeCbo
— Jon Ralston (@RalstonReports) July 3, 2025
If a hypothetical pro gambler won $11 million in one year and lost $10 million, they previously could have deducted $10 million from their wins and paid taxes on just the $1 million in net profit. Now, they could only deduct $9 million, meaning they'd need to pay taxes on $2 million, effectively doubling their taxes in that scenario.
This could dissuade pro gamblers and other large-money bettors from participating in poker tournaments, daily fantasy sports contests or even bets at sportsbooks. The large amounts of money from small numbers of players help sportsbooks and DFS providers with needed liquidity to offer a wide range of bets with competitive betting lines against offshore books.
Without big money players, every bettor could see worse odds or more limited bet offerings, particularly on less popular sports and leagues.
Possible ‘winners’
Aside from unregulated, offshore books, the tax change could further shift betting habits away from regulated sportsbooks to alternatives.
That could include prediction markets. These platforms aren't currently regulated as sportsbooks in individual states but as futures contract operators the federal Commodity Futures Trading Commission oversees. Though users who profit from successful event contracts would still have to pay taxes, rates could be more favorable.
With more money going to prediction markets, this could also speed up what seems an increasingly inevitable clash to define and regulate these platforms. State gaming regulators already decried platforms such as Polymarket and Kalshi as illegal gambling operators, but courts have so far ruled states have no jurisdiction over operators that are now under federal purview.
Further court rulings, CFTC decisions and potentially Congressional changes are likely in the coming years. But if prediction markets, not technically gambling under the law, provide a more favorable financial environment for gamblers, the BBB could further accelerate their growth.
