Gambling Tax Changes in Big Beautiful Bill Could Hit Bettors, Racing

Senate tax bill includes provision limiting gambling deductions, raising concerns for horse racing industry

The Senate version of President Donald Trump’s “Big Beautiful Bill” contains a tax provision that could significantly impact professional gamblers and potentially harm the horse racing industry’s revenue streams.

Under the proposed legislation, gamblers would only be able to deduct 90% of their annual losses against winnings, down from the current 100% deduction allowance. The specific language appears in section 70114, “Extension and modification of limitation on wagering losses.”

“It is a big deal,” said Tom Rooney, CEO and president of the National Thoroughbred Racing Association (NTRA). He emphasized the potential impacts on horse racing revenues, particularly in jurisdictions without supplemental income sources.

The provision effectively creates a tax on gambling volume rather than actual profits. As NBC Sports explains it, “$100,000 in winnings against $100,000 in losses will be treated for tax purposes as if the losses were only $90,000.”

Rooney confirmed he’s working alongside other gaming entities, including the American Gaming Association, to petition lawmakers about the issue.

“We’ve let it be known to our friends on the Hill that our sport is generated by the people that play the horses. And, if they’re dissuaded in any way to do that, it’s going to hurt our sport,” Rooney said.

Professional gambler Phil Galfond warned about the provision’s potential consequences in a post on X (formerly Twitter). He provided a detailed example of how high-volume gamblers would be affected.

“Let’s say that over the course of all the sessions we play throughout the year, we won $5.2 million and we lost $5 million for a net of $200,000,” Galfond explained. “Now we would pay as if we won $5.2 million minus 90% of $5 million, which is $4.5 million, for a fake net of $700,000. So, you would make $200,000 during the year, [but] you would pay tax as if you made $700,000.”

Galfond described the situation as “completely untenable,” adding: “You can’t be a professional gambler in the U.S. if this goes through. And that will have a ripple effect on industries that depend on professionals [gamblers].”

While the House is currently voting to reconcile their version with the Senate’s, they can remove language but not add new provisions at this stage.

“Whether or not they can change language this late in the game is very tough,” Rooney said regarding efforts to remove the gambling tax provision.

He explained the motivation behind the change: “People ask, why are they moving this gambling tax from 100% to 90%, it’s because of revenue, and just trying to find money wherever they can.”

The broader bill includes substantial tax cuts primarily benefiting wealthy Americans, increased military and immigration enforcement spending, and significant cuts to social programs including Medicare and children’s food assistance.

Independent analysis indicates the legislation would increase the national debt by $3.3 trillion over the next decade despite these cuts.

As of Wednesday, Rooney indicated the gambling tax language would likely remain in the bill, though he noted “final passage is uncertain” for the entire budgetary package.