One Big Beautiful Change to Gambling Taxes

An amendment to the One Big Beautiful Bill will significantly impact players and casinos. Gamblers can only deduct 90% of their write-offs on losses when filing annual taxes. Many believe this would also have an adverse effect on professional gamblers. Read on for details on the change and how casinos will tackle it.

A Change in Taxes

This change would significantly affect professional gamblers, who may be taxed even if they break even on losses. For example, if they win $200,000, but lose $210,000 a year, they would owe $11,000 in taxable income. US expats would also be negatively affected as they can’t rely on itemizing and may face complications with currency conversion.

“This new amendment to the One Big Beautiful Bill Act would end professional gambling in the US and hurt casual gamblers, too.”

– Paul Galfond, professional poker player

Tourists gambling in the US have to itemize any of the US-sourced losses and must also consider the 90% limit. However, the bill will also raise the IRS’s reporting threshold for slot machine winnings to $2,000, which may make those games more appealing. Lawmakers estimate these changes could bring in $1.1 billion in federal revenue over ten years.

Illinois Tax Law

For players in Illinois, this change poses a greater challenge, as it compounds with the state’s increase in sports betting taxes. Operators must pay a 25-cent tax on every fiscal year wager up to the first $20 million. They must pay 50 cents for each wager above that limit. The law was introduced last month and primarily affects large operators like DraftKings.

“Customers understand that they will be the ones to bear the cost of this new tax.”

– Sports Betting Alliance

DraftKings commented on the legislation stating they believe this will push customers to illegal markets. They also plan to introduce a 50-cent surcharge on all bets if a compromise can’t be reached by September 1st. Many other casinos also plan on having customers bear the increasing costs and raise prices.

VIP Incentives

While operators plan on raising costs, they’re also considering ways to attract high-rollers, who will be affected the most. Some suggest improvements to VIP schemes like celebrity dinners. However, legislators are concerned with over-reliance on VIP customers, as they make up a significant part of a sportsbook’s revenue, despite being a small part of the customer base.

“You can have dinner with someone on the Knicks like Josh Hart.”

– Chad Baynon, Head of US Gaming Research at Macquarie University

The tax changes present an additional challenge, increasing the competition between sportsbooks and prediction markets. Bets at sites like Kalshi are regulated as futures and aren’t affected by the limit on tax write-offs. High rollers may be tempted to wager at these markets, leading to further revenue loss for sportsbooks.

Fair Bet Act

Fortunately, operators may have a chance to reverse this law. Representative Dina Titus introduced the Fair Bet Act, which plans to restore the full tax deduction percentage. Since its introduction, the act has received strong bipartisan support with ten cosponsors. While the American Gaming Association initially supported the One Big Beautiful Bill, it now approves of the Fair Bet Act.

“My FAIR BET Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won.”

– Representative Dina Titus

The Fair Bet Act remains at the House Ways and Means Committee. While an off-site committee hearing was conducted in Las Vegas, no new developments have occurred. The act must pass before 2026, otherwise the One Big Beautiful Bill’s amendment will be enacted.

Conclusion

The One Big Beautiful Bill could have a negative impact on sportsbooks. The changes could push players to markets with fewer restrictions, while casinos try to find ways to retain VIP customers. While lawmakers like Representative Dina Titus wish to overturn this decision and have support, it’s unclear if the Fair Bet Act will succeed. With New Jersey also introducing a tax hike, operators will continue to face challenges.