The world of gambling, both professional and recreational, is facing a potential seismic shift with a new amendment to the One Big Beautiful Bill Act. This legislative change, if passed, could fundamentally alter how gambling winnings and losses are taxed in the United States, potentially ending professional gambling as we know it and significantly impacting casual gamblers as well.

The Proposed Change

The amendment in question limits deductions for gambling losses to 90% of annual winnings. This means that even if a gambler breaks even or incurs a net loss, they could still owe taxes on a portion of their winnings. For professional gamblers, who often operate with high volumes and thin margins, this could be particularly devastating.

Implications for Professional Gamblers

Professional gamblers, who rely on their winnings to make a living, could find themselves in a precarious position. For instance, if a professional gambler wins $100,000 but loses $100,000, under current law, they would owe no tax. However, with the new amendment, they could only deduct $90,000 in losses, leaving them with $10,000 in taxable income. This scenario could force many professionals to reconsider their careers, as the financial burden might outweigh the potential rewards.

Impact on Casual Gamblers

Casual gamblers, who engage in gambling for entertainment rather than as a primary source of income, are not immune to the effects of this proposed law. Even those who break even or lose money could face unexpected tax bills. For example, a casual gambler who wins $50,000 but loses $50,000 would currently pay no tax. Under the new law, they could only deduct $45,000 in losses, resulting in a $5,000 taxable income. This could discourage many from participating in gambling activities altogether.

Broader Industry Consequences

The ripple effects of this amendment could extend beyond individual gamblers to the broader gambling industry. Industries that depend on professional gamblers, such as poker and daily fantasy sports, could see a decline in participation. This, in turn, might lead to reduced revenue for operators and a potential shift towards unregulated offshore gambling platforms, which offer less protection for consumers.

What Can Be Done?

Phil Galfond, a well-known figure in the poker community, has urged individuals to contact their representatives to voice their concerns about this amendment. The legislative process is still ongoing, and there is a chance that the provision could be revised or removed before the bill is finalized. Staying informed and actively participating in the democratic process can make a difference.

Conclusion

The proposed amendment to the One Big Beautiful Bill Act represents a significant change in the taxation of gambling in the US. While the intention might be to curb gambling activities, the potential consequences for both professional and casual gamblers are profound. As the bill moves through the legislative process, it will be crucial for all stakeholders to engage in the discussion and advocate for a balanced approach that considers the diverse impacts on the gambling community.

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