A tax change inserted into Trump’s Big Beautiful Bill has caused alarm among gamblers and threatens to drive bettors to offshore gambling sites.
Under the new tax change, gamblers can only deduct 90% of their losses from winnings, before paying tax on the difference.
In real terms, this means gamblers who are turning a small profit or breaking even will end up paying more tax than they win, and profiting gamblers will see their profits drastically reduced.
For example, if a bettor won $101,000 but lost $100,000, under the current system, they would pay tax on the $1,000 net profit. However, with the change, they will only be able to deduct $90,000 of the losses, leaving $11,000 to pay tax on.
At current tax rates, that would lead to a tax bill of $2,640, well over double the net winnings figure of $1,000.
As a result, many gamblers would turn to alternative options such as offshore betting sites, where US tax laws do not apply.
Lawmakers Seek To Reverse Tax Change
Rep. Dina Titus is leading the charge to repeal the tax change in Trump’s bill, which Elon Musk famously called a “disgusting abomination”.
Titus says the government “should be encouraging players to properly report their winnings and wager using legal operators,” and suggested the tax change “will only push people to not report their winnings and to use unregulated platforms.”
In the US last year, unregulated platforms already far outstripped regulated gambling sites. Unregulated platforms that operate in a gray area in the US include offshore gambling sites, sweepstakes casinos, prediction markets, and crypto casinos.
Together, the platforms generated $67 billion in revenue last year, compared to $23 billion from regulated sites.
Titus believes this gap will only increase with the tax change in Trump’s bill and has introduced legislation in response. The FAIR BET Act (Fair Accounting for Income Realized from Betting Earnings Taxation) would restore gamblers’ ability to deduct 100% of their losses from winnings before paying tax on any remaining profit.
“My FAIR BET Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won,” Titus said. “It gives everyone—from recreational gamblers to high-stakes gamblers—a fair shake.”
Alternative Bill Blocked In Senate
Following the FAIR BET Act introduced in the House, Sen. Catherine Cortez Masto introduced the FULL HOUSE Act (Facilitating Useful Loss Limitations to Help Our Unique Service Economy) in the Senate.
Cortez Masto had sought to expedite the bill through the legislative process as it emerged many Senators were not aware they had passed the tax change buried deep in Trump’s 940-page ‘Big Beautiful Bill’.
Sen. John Cornyn of Texas admitted, “I don’t know anything about it. I’m not sure what it does,”, while Sen. Chuck Grassley of Iowa revealed in an interview, “If you’re asking me how it got in there, no, I don’t know.”
However, despite bipartisan support, Republican Senator Todd Young said he would only support accelerating the legislation if it was amended to restore a scratched endowment tax exemption for certain religious institutions.
As a result, the bill will now have to go through various committees before full votes on the Senate and later House floors if it is to make it into law.
Cortez Masto commented on Young’s intervention to block the bill’s progress, commenting, “I have to say it is a shame that we cannot pass this common-sense fix because Republicans want to weigh it down with unrelated measures that they voted to support.”
Sen. Jacky Rosen, a suppprter of the legislation similarly said “Republicans are once again showing that they couldn’t care less about the impacts of their new extreme law” and called Trump’s bill the “Big Beautiful Betrayal”.
The bill will now go to the Senate Finance Committee for discussion.
