The US Senate’s newly approved revision of the “One Big Beautiful Bill Act” could significantly alter the tax schema for bettors in the US, with a controversial provision that could leave some paying more in taxes than they generate in net winnings.
Approved on Tuesday in a narrow 51–50 vote, the Senate’s 940-page version of the President Trump-backed legislation introduces a cap on how much bettors can deduct in losses.
The change may disproportionately affect professional and high-volume bettors.
The sweeping bill contains major reforms to both tax policy and government spending.
Among its most contentious provisions related to betting is a new rule that limits allowable deductions for wagering losses to 90% of annual winnings.
Previously, federal tax law allowed gamblers to deduct losses up to the full amount of their winnings, which ensured they were only taxed on actual net income from gambling activities.
This 90% deduction cap also includes non-wagering expenses associated with professional gambling operations.
These can include costs such as subscriptions to handicapping data services, travel for poker tournaments, or tools used to analyse odds — expenses traditionally considered separately from losses.
Under current law, professional bettors could itemise these business-related costs in addition to claiming losses, potentially reducing their taxable income further.
However, the Senate version changes that framework by consolidating losses and other expenses under the new 90% cap.
If enacted, this would create a scenario where only 90% of total deductions — to be applied to both — could be claimed against gross winnings.
No way to make a profit
This alteration could have drastic financial consequences, as professional poker player Phil Galfond pointed out on X.
For example, a professional bettor with $101,000 in gross winnings and $100,000 in combined losses and related expenses would previously report just $1,000 in net taxable gambling income.
Under the Senate’s version, they would only be allowed to deduct $90,000, resulting in a reported taxable income of $11,000.
At a federal tax rate of 24% (the standard withholding rate on gambling winnings), this would yield a tax liability of $2,640. Despite technically profiting only $1,000, the bettor would owe more than twice that amount in taxes.
Even for bettors in the lowest tax bracket, this change could mean a net financial loss for anyone with relatively slim profit margins.
While this provision was not included in the original House version of the bill passed in May, that version proposed capping total deductions (including business expenses) at 100% of gambling winnings.
Final passage of the bill remains uncertain. Because the Senate’s amendments differ significantly from the House version, the legislation must now return to the House for approval.
A conference committee, composed of members from both chambers, is expected to be convened to reconcile the two versions.
The Senate vote passed by the slimmest of margins, with Vice President JD Vance casting the tie-breaking vote after three Republicans joined 47 Democrats in opposition.
The razor-thin margin highlights the different stances lawmakers have toward the bill’s complex fiscal components, especially in areas where federal tax policy intersects with emerging industries like legal gambling.
