President Donald Trump’s “One Big Beautiful Bill” could have huge consequences for the sports betting industry.
The Republican-backed legislation would limit deductions for gambling winnings to 90% of annual losses, meaning that a positive year could actually leave bettors in the red. Current laws allow gamblers to deduct 100% of betting losses below a net profit.
The contentious bill, narrowly approved in the Senate, was also narrowly approved by the House on Thursday and sent to Trump, who is expected to sign it into law.
Paying taxes on losses
Trump urged Congress to send him the bill by July 4 so he could sign it into law on Independence Day. Like Thursday's vote, the House had approved a previous version of the bill by just a single vote.
The limit on gambling deductions could mean that gamblers would pay taxes on money they lost.
If a gambler won $2 million and lost $1.8 million in a year, that would leave them with a $200,000 net profit. However, the new bill would see their losses as only about $1.6 million. They’d be required to pay taxes on the $2 million in winnings and the $180,000 that was not deducted.
The rule would apply even to gamblers who didn't make money. An individual who won and lost $100,000 – meaning they did not make a profit – would be required to pay taxes on $10,000, or 10% of their $100,000 in losses.
Illegal gaming operators could be big winners
U.S. Rep. Dina Titus (D-Nevada) was concerned the legislation will push gamblers to illegal operators.
“This is just another attack on gaming and tourism and on districts like mine that rely on these industries. This also punishes people who are trying to do the right thing by reporting gambling on their taxes, pushing them towards offshore outlets and the predictions market, which unlike legitimate gambling sources, do not invest in bricks and mortar, pay state taxes, hire union labor, or contribute to problem gaming efforts.”
Many gambling experts and professional bettors spoke out against the bill, claiming that it would make it virtually impossible to make gambling a full-time job. That would have a number of trickle-down effects, such as pushing casinos and sportsbooks to change their offerings or driving high-rollers from platforms such as FanDuel and DraftKings to illegal offshore sportsbooks.
Once signed into law, the new tax standard for deductions will go into effect next year.
The right-wing House Freedom Caucus said the legislation could add $650 billion annually to the national deficit, which through May was $1.7 trillion. Estimates suggest the bill will add another $1.36 trillion to the national debt in 2025.
The world’s richest man, Elon Musk, criticized the bill on X.
“Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame!”