The Hidden "Gambling Tax" No One's Talking About
- Dustin Heath
- Jul 9
- 2 min read
On July 4, 2025, President Trump signed into law the sprawling One Big Beautiful Bill Act (OBBBA)—a 900‑page catch‑all with headline grabs like business tax cuts and Medicaid trimming. But tucked away in the tax section was a stealth provision few have noticed:
What It Means for You
Today: Win $100K, lose $100K—report zero taxable income.
Starting Jan 1, 2026: You’ll only be able to deduct 90% of losses. So win $100K, lose $100K? You now owe taxes on a phantom $10K gain
Example:
A pro bettor hits $200K wins and $210K losses. Under the new rule, losses deductible = 0.9 × $200K = $180K. So taxable income = $200K – $180K = $20K—even though they lost more than they won .
That’s right—you can lose money all year but still owe Uncle Sam.
Why It Matters—Big Time
Phantom Income Nightmare - Even breaking even (or losing) can now trigger tax bills.
Pro Bettors Hit Hardest - Industry heavyweights like Phil Galfond, Rufus Peabody, and Doug Polk warn this change could wreck professional gambling careers
$1.1 Billion Grab from High-Volume Players - The IRS expects this tweak to net $1.1 billion over eight years—on the backs of serious bettors
Why No One’s Talking?
It’s not exactly made for exploding headlines. Except for niche finance and gaming circles, the focus has been on energy rollbacks, Medicaid slashes, senior tax breaks, and car-loan deductions. Even Axios, covering the OBBBA’s under-the-radar parts, gave the gambling change only a footnote
Gamblers are talking—but outside mainstream news:
“Bettor 2 … owes tax on about $9 of ‘income’ despite being net negative on the year.”
Takeaway
Trump’s mega-bill pulled a fast one on gamblers—carving out $1.1 billion in extra taxes by creating phantom income and putting even losing bettors on the hook for returns they don’t have. Yet it's flown under the radar—buried in the fine print while the world debates other flashy provisions.
What to watch next: The FAIR BET Act’s fate—if it passes, it could restore fairness for gamblers; if not, small-time and professional bettors alike will keep paying tax on money they never kept.
Interested in Learning More - Feel free to book an appointment on Calendly here.
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