The Big Beautiful Bill – Hidden Tax Trap for Gamblers
The Big Beautiful Bill contains a hidden tax trap for gamblers, aside from being the biggest attack on the American society in history.
President Donald Trump’s sweeping “Big Beautiful Bill” just passed the House. It contains a little‑noticed amendment that could fundamentally alter the taxation of gambling activity across the United States.
Under the Senate’s version of the reconciliation package, gamblers would only be allowed to deduct 90 percent of their documented losses against winnings – effectively creating a new, stealth tax on play.
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Big Beautiful Bill Hidden Tax Trap – 10 % Reduction in Loss Deductions
Currently, gamblers can offset every dollar of losses against their gross winnings, so only net gains are taxable. The proposed amendment would reclassify 10% of those losses as non-deductible.
In practical terms, a bettor who wins $100,000 but also incurs $100,000 in losses would now face taxation on $10,000 of “phantom” profit — income they never actually realized.
Impact on Casual and Professional Gamblers
While 10% may seem modest, its effects magnify for high‑volume bettors. Professional gamblers — whose margins often hinge on full loss offsets — would see their after‑tax returns shrink significantly.
Over the course of a busy season, that extra tax burden could amount to tens or hundreds of thousands of dollars, potentially driving many sharps out of the market.
Even occasional players stand to lose: taxpayers who break even on paper would find themselves owing on sums they never pocketed.
Indirect Boost for Casinos and the Treasury
Paradoxically, the loss‑cap benefits both gambling operators and federal coffers. By discouraging skilled “sharp” bettors — who provide market liquidity — casinos may find their overall hold percentage rising in favor of the house.
At the same time, the Treasury collects taxes on phantom “income,” generating revenue without raising headline rates—a hidden windfall for deficit‑minded legislators.
Political Dynamics and What Lies Ahead
The Senate has now approved the bill after being heavily pressurized in time for President Trump’s desired July 4 signing, though he warned final passage could slip into mid‑July.
“It’s time to vote,” he declared as debate opened, even as a handful of Republicans questioned the fairness of a measure that hits middle‑class and casual gamblers.
On the other side, Senate Democratic Leader Chuck Schumer pledged to offer amendments aimed at restoring full loss deductibility and protecting leisure activities from hidden tax hikes.
Looking Forward
As Congress races to reconcile differences between House and Senate versions, the fate of the 90 percent cap remains uncertain.
Should it survive conference, the US gambling landscape may shift — punishing players further, rewarding operators at the expense of recreational bettors, and delivering a subtle but significant revenue boost to the federal government.
All eyes will be on Capitol Hill this week, where one small line in a 1,000‑page bill could carry outsized consequences for America’s gamblers.
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