The Bearer Of Bad News
I hate to be the one to break it to everyone, but the gambling loss deduction cap is very likely here to stay.
As we prepare to close the door on 2025, the gambling world will continue to debate several topics in 2026. Prediction markets, online casino and sports betting expansion, and the subject of today’s column: The gambling loss deduction cap.
The topic was recently broached by President Donald Trump (prompted by a question from a journalist), who dismissively said, “No tax on gambling winnings, I don’t know. I’m going to have to think about that.” Meanwhile, American Gaming Association President and CEO Bill Miller said he believes it will be fixed in 2026, during an appearance on the Business of Betting Podcast.
And Rep. Dina Titus’s FAIR BET Act continues to gain bipartisan support, including Republican Rep. Andy Barr.
But as much as everyone thinks it’s a good idea to shift the gambling loss deduction back to 100% of winnings, I have serious reservations that anything will get done.
Bipartisan Support… And Opposition
When the topic of legalization comes up, I often point out that gambling is one of a few bipartisan issues left in this country. Red states and blue states are in play. Legislative champions come from both sides of the aisle. And the final vote tally will include plenty of Republicans and Democrats.
But here’s the thing: The bipartisanship also applies to opposition. For every lawmaker eager to tap into gambling revenue for schools and infrastructure, there’s another decrying it as a moral hazard (the social conservative view) or a predatory industry preying on the vulnerable (the progressive Democrat view).
Raise Cain all you want about fairness, but the idea that lawmakers will be sympathetic to the plight of professional gamblers, and look at gambling loss deductions capped at 90% of winnings as a tax on phantom income, is a theory that is residing outside of reality.
And then there is the public. While aware of the existence of professional gamblers, the public doesn’t look at gambling winnings as income. Right or wrong, they look at it as a risky profession, and part of that risk is losing. As I’ve previously noted, if you peruse the comments of articles and social media conversations on this topic, you’ll see that most people don’t care, and just as many people would rather see the deduction reduced to 0% than restored to 100%.
Basically, the public’s sympathy for gamblers falls somewhere between here’s the world’s smallest violin and f**k your feelings. And if you don’t believe me, look no further than poker’s Black Friday.
Not the First Time the Govt. Gave Bettors the Finger
On April 15, 2011, the US government caused a mass exodus of professional poker players when it shuttered PokerStars and Full Tilt Poker. The fallout was massive and immediate: thousands of players lost access to their funds, and a mass exodus of professional poker players followed, many relocating to countries like Canada or Mexico where online gaming was less restricted.
Black Friday is a reminder that policy swings can indeed happen overnight, and highlights how an entire ecosystem can be upended in an instant, forcing professional poker players to adapt or quit.
And you know who didn’t care? Politicians and the public. Lives were devastated, but there wasn’t much sympathy for those impacted, whom lawmakers and the public just write off as gamblers, who took risks and didn’t get lucky this time. There were no calls to “fix” what Black Friday caused.
