A part of President Trump's "One Big Beautiful Bill Act" is causing gamblers around the country to worry. But one lawmaker is hoping to ease their concerns by taking action to combat this change.
Signed into law on July 4th after narrowly passing in the House, the Big Beautiful Bill alters the tax deduction rules for gambling losses, sparking widespread controversy in the gambling community. However, Nevada representative Dina Titus introduced legislation that will reinstate the previous 100% tax deduction on gambling losses, which was removed from the federal budget bill that President Trump signed.
Now, with legislative pushback gaining momentum, this change may not remain in place for long.
The Big Change: Gambling Loss Deductions & Threat of Offshore Gaming
Historically, gamblers in the United States could deduct 100% of their gambling losses from their taxes, effectively offsetting their taxable income if they broke even or incurred a net loss. However, under the new budget bill, this deduction is restricted to just 90% of losses. This might not sound like a significant difference, but for high-volume gamblers, the impact is substantial.
Here's why this matters: if a gambler wins $100,000 but also loses $100,000 during the year, they can now only deduct $90,000 of those losses. This means they're taxed as if they earned $10,000 despite breaking even. At a 24% tax rate, that translates to a $2,400 tax bill on non-existent profit, a scenario that could drastically affect the livelihoods of professional gamblers.
It's also possible that the change will implement a shift towards offshore gambling. Such platforms operate outside U.S. regulation, lack player protections, and evade U.S. taxes. This could result in lost tax revenue for the U.S. and increased risks for gamblers, who may face issues such as unreliable payment systems and insufficient consumer protections.
The Response and the FAIR BET Act
Seeing the potential fallout from this provision, Nevada Representative Dina Titus, alongside California Democrat Rohit Khanna, introduced the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET Act).
This legislation seeks to restore the full 100% tax deduction on gambling losses, mitigating financial strain on gamblers and preserving the economic ecosystem that these high-rollers help sustain.
“The recently passed budget bill (Big Beautiful Bill) included a provision inserted by Senate Republicans without consent of the House that imposed a tax increase on Americans who gamble by reducing from 100 percent to 90 percent the amount of losses they can deduct from gambling winnings for their income taxes,” Congresswoman Titus said. “My FAIR BET Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won.
Phil Galfond Also Fighting Back
Professional poker player Phil Galfond and industry experts have voiced strong opposition to the Big Beautiful Bill's new deduction limits, emphasizing that skilled gamblers play a crucial role in the gambling industry's operational integrity. They provide liquidity, set accurate betting lines, and drive massive prize pools.
He posted a video on his X account condemning the move.
The post's description reads: "I thought the tax changes would end pro poker. For some, they will. Others survive. I ran real data to help my students plan. Sharing here for anyone it might help."
How Gambling Taxes Work
To understand the debate, it's essential to know how gambling taxes typically function.
In the U.S., gambling winnings are fully taxable and must be reported as income on tax returns. However, you can also deduct gambling losses, but only up to the amount of your winnings, and you must itemize your deductions to do so. This balance is what ensures that gamblers are taxed fairly on their net gains.
Industry and Legislative Perspectives
The American Gaming Association (AGA) has thrown its support behind efforts to restore the full gambling loss deduction, recognizing its critical importance to the industry.
"The American Gaming Association applauds Congresswoman Titus for introducing the FAIR BET Act," the organization said in a statement. "We are committed to working with Congresswoman Titus, other congressional leaders, and the Trump Administration to restore the long-standing tax treatment of gaming losses."
The AGA says that legal, regulated gaming is crucial not only for revenue collection but also for ensuring player safety through responsible gambling protocols that offshore sites typically disregard.
The government is trying to cut down on its debt, but reducing the tax deduction for gambling losses could hurt professional gamblers and the whole gambling industry. Whether the FAIR BET Act passes will play a big role in shaping the future of gambling in the U.S. and its impact on the country's budget.
