New 2026 Gambling Laws Impact Players on Major Gambling Sites

If you’ve been doing well at the casino or on gambling apps, you could be hit with a surprise tax bill starting next year, even if you don’t make money overall. The Internal Revenue Service will begin allowing gamblers to deduct just 90 percent of their losses from their winnings beginning Jan. 1, 2026. Under the current system, gamblers can fully deduct their losses against their winnings, meaning they can break even and owe no taxes. The new rule, however, is projected to bring in an estimated $1.1 billion over 10 years.

The new rule affects all forms of gambling, including sports betting websites that are now available in 39 states. Here’s a look at how the 90% limit can affect your tax bill, so you can plan accordingly for your next round of gambling and not be surprised come tax time.

The 90% Gambling Loss Deduction Cap Takes Effect in 2026

The One Big Beautiful Bill Act was signed into law July 4, 2025. Until then, if you itemized your deductions, you could deduct 100% of your gambling losses against your gambling winnings, dollar-for-dollar. Starting with the 2026 tax year, you can deduct 90% of your gambling losses against your winnings, even if your losses equal or exceed your winnings.

This results in what tax experts refer to as “phantom income.” For example, if you won $10,000 and lost $10,000 over the course of a year, whether through regular play or while using bonuses, you essentially came out flat at the gambling sites. Under prior tax law, all of your $10,000 of losses would have been able to offset all $10,000 of your winnings, making no gambling income taxable.

But what if your losses are greater than your winnings? Let’s say you won $50,000 and lost $53,000. In that case, you could only deduct 90% of your $53,000 loss, or $47,700. So you would have $2,300 of taxable income even though you lost money! And you couldn’t carry over the remaining $5,300 of the excess loss.

Even though gambling losses are still a Schedule A itemized deduction, you can only use them if you itemize.

Who Gets Hit Hardest by the New Gambling Tax Rules

The revenue estimates suggest the brunt of the additional tax liability will fall on high-wealth individuals and professional gamblers. Even though professional gamblers that satisfy a series of IRS criteria can still take 100% of their gambling losses as deductions from their Schedule C income, those in the middle category, serious amateur gamblers that have wagered enough to warrant itemizing deductions but aren’t professional, are not afforded such treatment.

For example, if you bet $100,000 over the course of the year at online sportsbooks, win $48,000 and lose $52,000 for a net loss of $4,000, you will only be able to deduct up to $43,200 according to the new proposal. This means that you’ll pay federal tax on $4,800 of taxable income even though you lost money, and likely state income taxes as well in most states.

Gamblers who pursue bonus offers have a more complicated math problem. Deposit bonuses and free bets, including offers commonly compared on https://parhaatkasinot.biz/, can add another layer to tracking gambling income and losses. Because of the 90 percent cap, even careful bonus chasers could end up owing tax on promo money they redeposited for wagering requirements.

Two people who had the same amount of gambling income could end up owing different amounts of taxes based entirely on the state in which they live. Also, because gambling losses can be deducted only as an itemized deduction on Schedule A, people taking the standard deduction would have to pay tax on their gambling winnings without being able to deduct any losses.

How Major Gambling Sites and Regulators Are Responding

Titus, a Nevada Democrat, introduced the FAIR BET Act in Congress to scrap the 90% limit and make gambling losses fully deductible. She said the bill is meant to avoid a situation where bettors seek out off-shore betting operators not subject to IRS reporting. During a Las Vegas City Hall meeting earlier this year with local lawmakers, Titus said the 90% limit could drive gamblers off legal wagering sites and toward offshore operators. That makes checking licensing, payment terms and bonus restrictions through CasinoGuiden.biz more relevant before choosing where to play.

And the American Gaming Association told us advocates have through the end of 2026 to get a repeal enacted before the rules are applied to the 2027 filing season. Joe Maloney, the AGA’s senior vice president of strategic communications, said successful repeal legislation can be written to apply to 2026 tax income retroactively. But that’s just one piece of the puzzle. The reality is this is a standalone bill and its chances for success are pretty thin, so it will likely need to be attached to other must-pass legislation.

The major casino and gambling sports sites operators are changing their software in light of the new Form W-2G reporting threshold of $2,000 (vs. $1,200 for slot and bingo). The gaming companies are also tweaking their win-loss tracking software to enable patrons to more easily keep track of their 90% loss limit.

Conclusion

Because of the 90% cap, you will pay more in taxes when you gamble at online casinos. You will have to pay taxes on income that you didn’t receive in years where you break even or lose money overall. As such, keeping track of your gambling income and expenses is paramount for reporting on your tax returns. While the FAIR BET Act may eventually offer some relief, you are likely to pay more taxes for your 2026 tax returns onwards. Make sure you consult a tax advisor who can help you navigate these new rules.