- A brand new yr means a brand new federal tax legislation
- Two gambling-related tax provisions have been included within the “One Massive Stunning Invoice”
It’s a brand new yr, and with 2026 comes new tax implications for lottery gamers, on line casino gamblers, and sports activities bettors.
An aerial view of the Las Vegas Strip is seen in October 2023. With right this moment marking the beginning of 2026, the brand new yr brings two main tax implications to gamblers in the USA. (Picture: Shutterstock)
The “One Massive Stunning Invoice Act” handed by Congress and signed into legislation by President Donald Trump included two main tax implications associated to playing.
The primary is a constructive for on line casino gamers, as the edge for a slot machine to provoke a hand pay has been raised from $1,200 to $2,000. The adjustment means a slots participant received’t be issued a W-2G type for profitable as much as $2,000 on a spin.
Nonetheless, some states will proceed to power casinos to halt a slot machine when it wins upwards of $1,200 attributable to state tax legal guidelines remaining on the threshold. However the revenue received’t be reported to the IRS for functions of the filer’s federal return.
The slot threshold change can be seen as helpful to casinos, as their machines might be taken offline fewer instances and the overhead of getting slot attendants reply to $1,200 wins might be diminished.
Playing Deduction
A extra consequential playing tax legislation change within the Republicans’ One Massive Stunning Invoice is that, starting with the 2026 tax yr, deductions of playing losses in opposition to winnings are capped at 90%.
Part 70114 of the invoice, the “Extension and Modification of Limitation on Wagering Losses,” reads:
For functions of losses from wagering transactions, the quantity allowed as a deduction for any taxable yr shall be equal to 90 % of the quantity of such losses throughout such taxable yr, and shall be allowed solely to the extent of the features from such transactions throughout such taxable yr.”
Meaning a gambler who wins $100K taking part in slots, desk video games, the lottery, betting on sports activities, or every other type of playing can solely deduct as much as 90% of their losses in opposition to their winnings. For instance, if an individual wins $100K but in addition loses $100K playing throughout a yr, they might nonetheless must pay federal taxes on $10K.
Since prediction markets, together with these providing sports activities contracts, are regulated by the Commodity Futures Buying and selling Fee as a kind of by-product, the playing tax change received’t apply. That would deliver new sports activities bettors to prediction markets, on-line exchanges that the gaming business drastically opposes on claims that they’re working unregulated sports activities betting.
2026 Repair May Be Retroactive
Nevada’s congressional delegation is searching for to revive the playing deduction to 100%. Rep. Dina Titus and Sen. Catherine Cortez Masto, each Democrats, say lowering the deduction will drive gamblers to offshore sportsbooks and unregulated casinos, which don’t report wins to the federal authorities and have few client protections in place.
Titus and Cortez Masto are respectively behind the FAIR Guess and FULL Home acts, laws that may restore the playing deduction to 100%. Each payments could possibly be retroactive, that means the 2026 tax legislation may be amended to an efficient date of Jan. 1, 2026.
