Why gamblers could now still owe money, even if they break even

(NEXSTAR) – Thanks to a provision buried among the hundreds of pages of the Trump’s Big Beautiful Bill is a tax provision that limits gamblers’ ability to offset their losing bets.

“Only 90% of wagering losses are now deductible, up to the amount of their winnings,” according to tax preparation company H&R Block.

With March Madness in full swing and the NBA Playoffs rapidly approaching, sports bettors now have another consideration as they place wagers in 2026.

While the change to the tax code may seem small at first, Cato Director of Tax Policy Studies Adam N. Michel says it represents a larger problem with the tax code.

“That means a gambler who breaks even over the year will still owe tax on income they never actually earned,” Michel writes.

Imagine a person who wins $10,000 on the Super Bowl, but runs into a series of bad bets over the rest of the year, losing $10,000 in the process. Historically, professional gamblers and taxpayers would be able to deduct their losses against their winnings, Michel adds, which recognizes “the basic principle that you should be taxed on your net income, not your gross receipts.

In the example above, the taxpayer would only be able to claim $9,000 in losses and would face a tax bill for the remaining $1,000 in winnings that weren’t offset by losses.

“When loss deductions are delayed, capped, or denied, the government systematically overstates taxable income, effectively penalizing the risk taking that generates the income in the first place,” Michel adds.

Gamblers should keep a log of winnings and losses throughout the year, TurboTax suggests. The company reminds taxpayers that claimed losses can never exceed the reported amount of winnings, and the two should be declared separately (losses aren’t just subtracted from winnings on one’s tax return).

“Visiting a casino can be fun, but at the same time frequent casino visits are not advisable from a tax planning perspective,” according to tax firm RJS Law. “The ‘Big Beautiful Bill’ further punishes gamblers by taxing them on gains not realized.”

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