The Senate passed Trump’s Big Beautiful Bill on Tuesday, and part of the legislation could mean that profiting gamblers pay more in taxes than they win.
JD Vance had the deciding vote in the Senate to narrowly approve Trump’s One Big Beautiful Bill Act in a 51-50 vote. The bill also scraped through the House of Representatives in a 215-214 vote with one abstention. Following amendments in the Senate, it will now go back to the House, and if approved again, it will be up to Trump to sign off on the legislation, which Elon Musk called a “disgusting abomination”.
One of the amendments in the Senate limits deductions for gambling-related losses and expenses to no more than 90% of a taxpayer’s annual gambling winnings.
BBB Could Implode Gaming Industry, Says Pro-Gambler
Professional gambler and Unabated co-founder Captain Jack Andrews posted on X, “I say this sincerely: This will implode the entire gaming industry.”
Currently, under Internal Revenue Code §165(d), “Gambling losses can be deducted only to the extent of gambling winnings in a given tax year.” This includes expenses for professional gamblers (e.g. travel, subscriptions), thanks to amendments in the Tax Cuts and Jobs Act in 2017.
As noted by In Game, if a gambler has $101,000 of taxable winnings and $100,000 of losses plus expenses during a year, their net winnings would be only $1,000. However, with only $90,000 of losses and expenses able to be deducted, their taxes would be based on winnings of $11,000. If taxed at 24% — the federal withholding rate for gambling taxes — that would lead to a tax bill of $2,640, or well over double the net winnings figure.
Gambling Taxes Continue To Increase
In addition to the proposal to effectively increase taxes on winning gamblers, states have also been ramping up the taxes on betting companies. Illinois has notably introduced a tax on gambling companies for every bet accepted. This week, Fanatics announced they would pass this cost onto the user, joining FanDuel and DraftKings in similar moves.
The Sports Betting Alliance (SBA), made up of the country’s five leading sportsbooks, has been vocal in opposing tax increases and called the tax in Illinois “discriminatory”.
The new tax in Illinois comes into effect today (July 1), as do increased rates in New Jersey and Maryland. In New Jersey, the tax on sports betting and casinos will now be 19.75%, while Maryland has similarly raised its tax from 15% to 20%. Louisiana lawmakers also voted in favor of increasing its tax rate from 15% to 21.5%, although no date has been set yet for the change to come into effect.
The SBA says that the tax increases have the risk of turning gamblers away from regulated betting sites towards offshore sportsbooks that do not have to pay federal or state taxes.
Similarly, gamblers using these sites would be unlikely to declare their winnings and could therefore escape the changes implemented by the Senate to Trump’s bill.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
