The new tax law signed by President Donald Trump on July 4 has introduced significant changes for American gamblers.
Buried in the 900-page One Big Beautiful Bill Act (OBBA) is a long-awaited update to the slot machine tax reporting threshold, alongside a controversial new limit on how much gambling loss bettors can deduct on their taxes.
Key Takeaways
- Slot win tax threshold raised to $2,000, starting in 2026
- New rule limits deduction of gambling losses to 90%
- Critics warn changes could drive bettors to unregulated markets
The bill raises the threshold for slot machine hand-payouts and mandatory tax reporting from $1,200 to $2,000 and ties future increases to inflation beginning in 2027. This means casinos will only need to issue IRS Form W-2G and pause machines for wins exceeding $2,000 starting in 2026.
The American Gaming Association welcomed the change, having campaigned for the increase for many years. They argue that inflation has eroded the practicality of the $1,200 cap, which would exceed $6,600 in today’s economy if adjusted.
New loss deduction rule alarms gamblers
While the slot threshold increase was welcomed by many, a different section of the OBBA has drawn criticism from professional gamblers and industry leaders. Starting in 2026, taxpayers will only be able to deduct 90% of their gambling losses against their winnings, a reduction from the current 100% allowance.
This new rule could result in bettors paying taxes even when they break even or lose money. Critics say this change targets professional players and could hurt legal betting industries such as poker and daily fantasy sports.
"You can't be a professional gambler in the U.S. if this goes through and that will have a ripple effect on industries that depend on professionals. I know you think a lot of industries don't depend on professionals but the poker industry does, the DFS industry does. This will impact all the players,” said poker professional Phil Galfond in a social media video.
This new amendment to the One Big Beautiful Bill Act would end professional gambling in the US and hurt casual gamblers, too.
— Phil Galfond (@PhilGalfond) July 1, 2025
You could pay more in tax than you won.
Contact your representative quickly. pic.twitter.com/U5yToBZDcQ
FAIR BET Act to the rescue?
In response to that backlash against the gambling tax deduction change, House Representative Dina Titus introduced the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act on July 7. The bill seeks to restore the 100% deduction for gambling losses and reverse what Titus called a last-minute Senate provision added without House consent.
“This common-sense legislation will bring fairness back to gaming taxation, making sure that gamblers can fully deduct losses when they report their winnings,” said Titus in a statement.
The American Gaming Association also supports the FAIR BET Act, acknowledging that while the OBBA brings some needed reforms, the loss deduction change could drive bettors to unregulated markets.
As the 2026 implementation date approaches, both sides of the industry will be watching closely to see whether Congress revisits the issue.
