U.S. Sports Betting Industry Bracing for Potential Impacts from Washington Politics
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Recently, a significant change has taken place in the U.S. tax code, the "One Big Beautiful Bill Act," which introduces modifications to gambling taxation. The key implications of this act are:
1. **Limit on Gambling Loss Deductions:** Starting from January 1, 2026, bettors will only be able to deduct up to 90% of their gambling losses against 100% of their gambling gains in any given tax year. Previously, gamblers could deduct 100% of their losses against their winnings. This means that taxpayers who break even or even lose money on betting may still owe taxes on phantom taxable income[1][2][3].
2. **Tax Burden on Professional and High-Limit Gamblers:** This restriction could particularly impact professional gamblers and those who engage heavily in betting, as it reduces the ability to offset winnings fully with losses. Critics in the betting community and some Nevada lawmakers have expressed concerns that this provision unfairly harms gamblers by increasing their tax liabilities[2].
3. **Casino Industry Perspective:** The American Gaming Association (AGA), representing casino interests, praised the bill overall for supporting economic benefits and business innovation in the industry. They indicated ongoing work with Congress to address changes related to wagering deduction losses and to modernize the tax code further[1].
4. **Broader Context and Uncertainty:** The bill is lengthy and was passed rapidly, leading experts to warn of many detailed impacts yet to be fully understood. The tax provision on gambling losses is permanent and represents a fundamental shift in tax treatment, which could affect consumer behavior, tax compliance, and the economics of betting and online casinos[3].
As for prediction markets, the impact of the new tax law remains unclear, as it doesn't specifically mention direct effects on them. However, since prediction markets often involve elements of betting, the limitation on deducting losses may also apply, potentially increasing tax burdens on participants in those markets if they are treated the same under tax law.
In summary, the bill restricts gambling loss deductions to 90%, effectively increasing taxable income for many gamblers. This change has raised concerns across the betting community, especially among professional gamblers, while the casino industry views it as part of a broader legislative package supporting their sector. The impact on online casino operators, gamblers, and potentially prediction markets includes increased tax liabilities and possible shifts in betting behaviors starting in 2026[1][2][3].
For more insights and information about the U.S. online casino industry, be sure to check out Michael Savio's latest articles on casinos.com and x.com/g00sefactory.
- The recent change in the U.S. tax code, the "One Big Beautiful Bill Act," could profoundly affect sports betting, as it limits gamblers to deducting only 90% of their losses against 100% of their gains from 2026 onwards.
- This legislation could pose a significant challenge for professional sports bettors and high-limit gamblers, as it reduces their ability to offset winnings fully with losses, potentially leading to higher tax burdens.
- The American Gaming Association, representing casino interests, has welcomed the bill for its support of economic benefits and business innovation within the industry but plans to collaborate with Congress to address changes related to wagering deduction losses and further modernize the tax code.
- The impact of the new tax law on online casino operators, gamblers, and prediction markets is still being assessed, with potential consequences including increased tax liabilities, possible shifts in betting behaviors, and an uncertain future for prediction markets due to indirect implications.
