Gamblers Sound the Alarm Over Tax Change in Trump’s Agenda Bill
Industry warns new deduction rule could harm professionals, push players toward unregulated markets
Professional Gamblers Push Back on “Phantom Tax” Provision
A little-known change in President Donald Trump’s sweeping tax and spending bill is drawing sharp criticism from professional gamblers, casino operators, and lawmakers. The measure, which lowers the amount of gambling losses that can be deducted from winnings, could lead to gamblers owing taxes on income they never actually earned—sparking what critics call a tax on “phantom” profits.
Previously, gamblers could deduct up to 100% of their losses against their winnings. Under the new law, that deduction is capped at 90%. That means someone who wins and loses the same amount in a year—say, $100,000—would still be taxed on $10,000 of income, despite not coming out ahead.
“It’s just really not good policy to have you paying taxes on phantom money that you didn’t earn,” said Rep. Dina Titus (D-NV), who represents Las Vegas and has introduced a bill to repeal the change.
A Quiet Addition With Big Consequences
The tax revision was added late in the legislative process by the Senate Finance Committee as part of the broader reconciliation strategy to ensure the bill passed under Senate rules. According to congressional sources, the gambling provision wasn’t driven by policy goals but rather by a need to demonstrate a budget impact—the Joint Committee on Taxation estimates it will generate $1.1 billion over the next decade.
Gambling losses have been deductible up to winnings for more than 50 years. That treatment was reaffirmed in Trump’s 2017 tax overhaul and preserved in the House version of this latest bill. But the Senate adjusted it to meet reconciliation guidelines.
“This wasn’t about gambling,” said an industry official. “It was about making the math work.”
Senators and Industry Voice Opposition
Even some Republicans say they were unaware of the change’s implications. Sen. Thom Tillis (R-NC) called it “bad policy” and said it would have been another reason to oppose the bill, which he voted against due to Medicaid concerns.
Sen. Catherine Cortez Masto (D-NV) is preparing a fix in the Senate, aiming to reverse the rule through unanimous consent later this week.
A spokesperson for the Senate Finance Committee declined to comment on the provision’s origin.
Impact Could Be Limited—But Devastating for Some
While casual gamblers may not feel the sting—since most don’t itemize gambling losses—the effect on professionals could be severe. Players who operate on narrow margins, especially in poker or sports betting, say the change threatens their livelihoods.
“In poker, the players barely scraping by won’t make it anymore,” said pro player Phil Galfond. “It just doesn’t feel right you can have a losing year and then pay tax on that losing year.”
Russell Fox, a tax advisor specializing in gaming, echoed those concerns: “High-volume, low-margin gambling is going to become untenable.”
Even recreational gamblers who hit a jackpot—on slots or in the lottery—could be affected, since winnings are taxed while deductions are now limited.
Industry Calls for Repeal to Protect Legal Gambling
The gaming industry is actively lobbying Congress to undo the change. The American Gaming Association (AGA) has sent multiple letters to key lawmakers calling for the restoration of the 100% deduction. DraftKings, one of the largest U.S. sports betting platforms, also voiced support for legislative efforts to reverse the rule.
While the AGA applauded the broader bill for lowering corporate taxes, it emphasized that the new gambling deduction rule undermines the industry’s financial fairness and could drive gamblers to unregulated offshore markets.
“It hurts the industry because people will go elsewhere,” Titus warned.
A Fix May Still Be on the Table
With bipartisan concern mounting and lawmakers working on amendments, there is still a chance the provision could be reversed before it takes effect next year. For now, the gaming world is watching closely—and calling on Congress to act before professional and regulated gambling takes a hit from what critics say is an unintended consequence of a hastily negotiated deal.
Source: CNN – Why an obscure provision in Trump’s big agenda bill has gamblers crying foul