Senate’s Tax Bill Could Force Gamblers to Pay Even When They Lose

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Updated by Alejandro Dalby7 Jul 2025
The U.S. Senate’s newly passed version of President Trump’s “One Big Beautiful Bill Act” includes a lesser-known clause that could dramatically change how gamblers are taxed. If passed, the bill would limit gambling loss deductions to 90%—meaning players might owe taxes even after losing money overall.
While the bill has sparked broader debate over healthcare and spending, this specific provision could reshape the gambling landscape in the U.S. for both casual bettors and professional gamblers alike.
How the 90% Deduction Cap Works
Under current IRS rules, gamblers can deduct their losses up to the amount of their winnings, effectively nullifying tax liability if they break even or incur a net loss. The Senate’s proposal caps this deduction at 90%.
Let’s say a gambler wins $100,000 but loses the entire amount. Today, they owe nothing. Under the Senate’s bill, only $90,000 in losses would be deductible, leaving $10,000 as taxable income—equating to roughly $2,400 in taxes despite zero profit.
Professional players stand to lose even more. In a widely shared example, poker pro Phil Galfond calculated that a high-volume gambler with $5.2 million in winnings and $5 million in losses would be taxed on $700,000—over triple the actual profit.
Industry Impact: Offshore Migration and Revenue Decline
Industry experts warn the proposal could backfire by pushing players to offshore gambling platforms, beyond the reach of U.S. regulations and tax enforcement. This would erode federal and state tax revenues while exposing players to fewer consumer protections.
Recreational gamblers might simply stop playing altogether. Faced with higher tax risks and shrinking rewards, they could turn away from regulated casinos and sportsbooks—especially as states like Illinois are already increasing taxes on operators, prompting surcharges from brands like FanDuel and DraftKings.
What Gamblers Need to Know About Current Tax Law
Gambling winnings—big or small—are considered taxable income in the U.S. Large wins usually come with a W-2G form, but even smaller wins must be reported. You can deduct gambling losses up to the amount of winnings, but no more.
Key rules include:
- You must report all winnings, with or without a W-2G.
- Losses can only offset winnings, not exceed them.
- Professional gamblers may deduct travel and meal costs—but only up to their winnings.
- Detailed recordkeeping is essential: dates, places, amounts, and documentation like receipts and betting slips are required.
What Happens Next?
The Senate passed the bill on July 1 with Vice President JD Vance casting the tie-breaking vote. The House must now review and vote on the Senate’s changes, including the 90% deduction cap.
Negotiations will likely go to a conference committee, where lawmakers from both chambers will iron out the differences. However, President Trump has demanded the bill be finalized by July 4. If the deduction cap survives, American gamblers could soon face a major tax shift—paying Uncle Sam even when they lose.

Written by
Jacob Evans
I'm Jacob Evans, your go-to expert in online gambling. With a robust background in casino gaming and a knack for breaking down complex betting strategies, I’m here to guide you through online casinos, sharing tips to help novices and seasoned bettors excel.

Facts checked by
Alejandro Dalby
I'm an experienced writer specializing in casino games and sports betting. My journey in the iGaming industry has equipped me with a deep understanding of gaming strategies and market trends. I'm here to share my insights and help you navigate the exciting world of online gambling.