Trump’s Big Tax Bill and its Impact on Online Gambling: What Players Need to Know

America’s online gambling scene shows a remarkable divide: thirty-eight states allow sports betting, while only seven permit online casino gaming. Players remain enthusiastic despite limited access, pushing commercial gaming revenue to new heights – almost $72 billion in 2024. The upcoming changes in Trump’s “Big Beautiful Bill” will soon alter how players handle their gambling activities and tax obligations.

The new legislation limits gambling loss deductions to 90% against winnings, rather than allowing full deductibility. These adjustments should bring in $1.14 billion extra tax revenue from 2026 to 2034. Last year, unregulated gambling platforms generated $67 billion compared to regulated sites’ $23 billion. This tax modification could drive more bettors toward offshore alternatives.

What Is Trump’s Big Tax Bill And Why It Matters

Trump’s “Big Beautiful Bill” stands as one of the biggest tax code revisions we’ve seen lately, with new rules about reporting gambling wins and losses. The bill’s main change affects how gamblers can handle their losses. So, instead of deducting all losses against winnings, they’ll only be able to offset 90% of those losses. This fits right into the government’s broader strategy to tighten gambling tax rules nationwide.

The timing of this tax change matters a lot. The iGaming industry grows faster across America, and 38 states now offer legal sports betting. The digital gaming world remains fragmented, with many states such as Tennessee, Utah, and South Carolina betting sites yet to give the green light. This leaves players choosing between legal and offshore options, which offer numerous benefits like bonuses, cryptos, and more betting markets. Certainly, more players might turn to unregulated markets because of this change. Players looking to dodge the new tax rules might find crypto gambling and offshore betting more appealing, even with legal risks.

How The New Tax Rule Affects Online Gambling

The IRS will roll out a major shift in gambling taxation rules on January 1, 2026. Players who itemize deductions won’t be able to fully deduct their losses against wins anymore. Tax experts call this “phantom income,” that is, money you never pocketed but still need to pay taxes on. Here’s a shocking example: You win $500,000 and lose the same amount in a year. You’d normally owe nothing in taxes. The new rules only let you deduct $450,000 of those losses, which means you’ll pay taxes on $50,000 despite breaking even.

Professional gamblers will take the biggest hit. A poker player’s $5.2 million in winnings with $5 million in buy-ins would mean actual profits of $200,000. Yet the IRS would tax them as if they earned $700,000; that’s a massive 250% tax increase. The rule hits everyone equally. Online sports bettors, casino players, and poker enthusiasts. Even casual players who break even will end up owing taxes.

Industry And Political Reactions To The Tax Change

The gambling industry moved quickly to respond after lawmakers passed the new tax provision. Professional poker player Phil Galfond didn’t mince words on social media: “This new amendment would end professional gambling in the US and hurt casual gamblers, too. You could pay more in tax than you won”. His message resonated with the professional gambling community, and poker player Tony Dunst called it a “potential disaster”.

Many lawmakers seemed confused about the provision’s origin. Senator Charles E. Grassley, an Iowa Republican on the Finance Committee, admitted plainly: “If you’re asking me how it got in there, no I don’t know”. The internal divide within Republican ranks became clear when Senator Thom Tillis labeled it “bad policy”. Public outcry sparked bipartisan action to reverse the tax change.

Rep. Titus pointed out this provision got “10 times the response” from constituents compared to other parts of the bill. This highlights its importance in the online gambling world nationwide, beyond just traditional gambling centers.

What Comes Next and How can Gamblers Prepare

Gamblers have time to adjust their strategies since the tax changes won’t take effect until January 1, 2026. Two key bills in Congress show promise to reverse this controversial provision through bipartisan efforts.

Representative Dina Titus introduced the FAIR BET Act in the House to bring back the full deduction for gambling losses. Catherine Cortez Masto’s FULL HOUSE Act in the Senate works toward the same goal. Both bills got support from all sides of politics, which hints at a possible legislative reversal before the changes kick in.

High-volume players could look at different platforms too. Unregulated markets already lead the way with almost triple the revenue of regulated sites. Crypto-based gambling platforms might become more appealing because of their privacy features and tax benefits.

Some pro gamblers might move to places with better gambling tax laws or even leave the country. This shift could lead to revenue leaving the American gambling industry if the tax rules stay the same. So, the next big news might change everything so stay tuned.