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A real life example has been presented to illustrate how this year's gambling tax will impact the bottom line of high stake poker players. But first, let's recap.
The Big Beautiful Bill
You probably heard about it, but didn't read the whole thing.
The Big Beautiful Bill was a sweeping U.S. federal statute, passed in 2025 by the 119th Congress as H.R. 1 and signed into law by US President Donald Trump. Spanning more than 900 pages, the bill contained a slew of provisions changing federal programs and the tax code, many of which lawmakers admit they are only now beginning to fully digest.
The gambling world quickly learned they would be impacted.
Under the new law, starting for tax years beginning January 1, 2026, gamblers can no longer deduct 100% of their gambling losses. Instead, losses are capped at 90% of actual losses when offsetting winnings.
Even if a gambler were to break even, the new law now requires these individuals to report taxable income.
In response, Democratic Sen. Catherine Cortez Masto of Nevada sought unanimous passage of a bill that would roll back the change on gambling tax deductions
“My understanding is many Republicans, many Democrats did not even know it was part of that process,” Cortez Masto said of the gambling provision.
But, in the end, Masto's bill failed to pass as Senate Republicans blocked efforts to roll back the massive hike on professional gamblers.
The Real World Example
Professional poker player David Kaye is among those vowing to stop playing online poker as a result.
He broke down the effect of the 2025 gambling tax, keeping in mind that some online poker players far exceed these numbers used in his example.
If the 2026 Gambling Tax change is not repealed, I will not be playing online poker next year. Scenario: Wins: $2,100,000 Losses: $2,000,000 Income: $100,000 Wins: $2,100,000 Losses (90%): $1,800,000 Taxable Income: $300,000 How can you tax Americans on money we didn't earn!?
Workarounds? Perhaps....But Not Really
While the vast number of online poker players patronize websites licensed in international jurisdictions the likes of ACR Poker and Coin Poker, among others, that do not report winnings to the IRS, poker players still understand they need to account for their yearly earnings. Conceivably, they can hold funds in a crypto wallet, but that is not always feasible.
For now, gamblers will mostly hold out hope that lawmakers roll back the provisions in 2026.
Masto has made this her mission.
This week, she signaled there is hope we could see that happening.
The congresswoman tweeted:
Earlier this year the BS Budget Bill reduced the tax deduction for gambling losses to 90%.
In response, I introduced the FAIR BET Act to restore the commonsense 100% tax deduction to protect professional and recreational gamblers. I was the first in Congress to introduce this fix and haven’t stopped garnering support from members and stakeholders since.
In fact, the #FAIRBETAct has up to 21 bipartisan co-sponsors with @RepEzell most recently joining!
It is now critical for @WaysandMeansGOP to add this bill to the legislative calendar before the year ends. We must get this fixed.
- Ace King, Gambling911.com
