- New modification limits deductible playing losses to 90%.
- Professionals might owe taxes on nonexistent revenue.
- Home-Senate showdown will decide remaining tax consequence.
US President Donald Trump’s so-called “huge, stunning invoice” would have a devasting influence on the lives {of professional} gamblers if it have been to move in its present type.
Trump’s “huge, stunning invoice” is projected by Republicans to chop roughly $4.46 trillion in tax income over 10 years. Strive telling that to skilled gamblers who could wind up being taxed on “phantom revenue.” (Picture: Shutterstock)
The sprawling federal spending invoice, which was accredited by the Senate this week, features a late-stage modification that may considerably increase taxes for skilled gamblers by limiting how a lot of their losses they will deduct.
Presently, US gamblers can deduct losses from their winnings supplied these losses don’t exceed their complete playing revenue. However underneath the brand new modification, solely 90% of these losses will likely be deductible, that means even gamblers who break even on paper might find yourself with a large tax invoice.
How Does Large, Stunning Invoice Damage Gamblers?
Let’s break it down extra merely. Beneath present regulation, a hypothetical gambler who breaks even in a yr by profitable $100K and shedding $100K at the moment pays nothing. Beneath the brand new guidelines, they might be required to pay tax on $10K, as solely $90K of their losses could possibly be deducted.
The underside line is that it makes it tougher to show a revenue, inserting an enormous burden on an already unstable occupation.
The proposed tax change isn’t simply dangerous, it’s a literal decimation {of professional} gamblers’ livelihoods. The time period “decimate” originates from the Latin decimatus, that means “to destroy one-tenth,” a brutal punishment as soon as inflicted on Roman legions to make an instance of troopers who had proven cowardice, desertion, or mutiny.
On this case, the federal government would successfully take away 10% of gamblers’ deductible losses, taxing revenue that doesn’t really exist.
The invoice squeaked by the Senate on Tuesday in a 51-50 vote, with Vice President JD Vance casting the decider. It now returns to the Home, which handed its model of the laws in Might. Notably, the Home model doesn’t embody the playing modification, setting the stage for a showdown over the ultimate language of the invoice.
Phantom Earnings
In a video posted to X, poker professional Phil Galfond warned that the change might lead to taxes being owed on “phantom” revenue, disproportionately hurting high-volume {and professional} gamers.
Let’s say that over the course of all of the classes that we performed all year long, we received $5.2 million and we misplaced $5 million {dollars} for a internet of $200,000,” Galfond stated.
“Now, we’d pay as if we received $5.2 million, minus 90 p.c of $5 million, which is $4.5 million for a faux internet of $700,000… So you’ll make $200,000 through the yr and pay tax as if you happen to made $700,000.”
Playing Misunderstood
Critics of the modification say it misunderstands how skilled playing works and dangers pushing expert gamers out of the regulated US market. Galfond and others argue that the brand new tax burden might encourage gamblers to make use of offshore platforms that don’t present the identical client protections or generate tax income for the US authorities.
The American Gaming Affiliation (AGA), which reported $114.6 billion in US playing income for 2024, hasn’t but launched a proper assertion, though lobbying efforts are doubtless already in movement to dam the measure within the Home.
If signed into regulation, the change would take impact in tax yr 2026. Till then, the Home should both settle for the Senate’s model or push again. For now, the playing world is watching intently — and bracing itself.
