I was just reading the story on the tax changes for gamblers this year. That got me wondering, do professional gamblers have to file as self-employed? If so, then they would have to pay the FICA/Medicare taxes, plus the self-employment half on their net winnings?
Yes, that's exactly right.
Professional gamblers are generally treated as self-employed for federal tax purposes and that has exactly the consequences you’re asking about, with a few important nuances.
The IRS and courts look at whether gambling is a trade or business under the usual factors (regularity, continuity, profit motive, time devoted, records kept, etc.). If you qualify, you report your gambling income on Schedule C, Profit or Loss from Business, the IRS tax form used by sole proprietors, freelancers, and single-member LLCs to report their business income and claim deductible expenses.
Gambling income after business expenses, but before gambling losses is subject to self-employment (SE) tax: Social Security tax (12.4%, up to the annual wage base) and Medicare tax (2.9%). That totals 15.3%, just like any other self-employed taxpayer. You can deduct half of the SE tax as an above-the-line deduction
The big wrinkle, as we've been discussing lately, is that professional gamblers are treated worse than almost any other self-employed individual. Gambling losses aren't treated as ordinary business expenses for deduction purposes in the same way as other businesses. Instead, they remain limited and self-employment tax applies without fully reducing income for those losses.
Self-employment tax still applies to the net profit after allowable deductions, so the 90% cap worsens the tax burden by increasing the taxable base.
Revised version with the 90% limit inserted (for current/2026 rules):
Professional gamblers are generally treated as self-employed for federal tax purposes, and that has exactly the consequences you’re asking about, with a few important nuances.
The IRS and courts look at whether gambling is a trade or business under the usual factors (regularity, continuity, profit motive, time devoted, records kept, etc.). If you qualify, you report your gambling income on Schedule C, Profit or Loss from Business, the IRS tax form used by sole proprietors, freelancers, and single-member LLCs to report their business income and claim deductible expenses.
Gambling income after allowable business expenses, but before the full scope of gambling losses, is subject to self-employment (SE) tax: Social Security tax (12.4%, up to the annual wage base) and Medicare tax (2.9%). That totals 15.3%, just like any other self-employed taxpayer. You can deduct half of the SE tax as an above-the-line deduction.
The big wrinkle, as we've been discussing lately, is that professional gamblers are treated worse than almost any other self-employed individual. Gambling losses (wagering losses) are limited under IRC §165(d) and aren't treated as ordinary business expenses in the same unrestricted way. For tax years beginning in 2026 (under the One Big Beautiful Bill Act changes), deductible gambling losses and related business expenses are capped at 90% of your gambling winnings (or your verified losses/expenses, whichever is less), even if actual losses equal or exceed winnings. This creates taxable "phantom income" in break-even scenarios (e.g., $100,000 winnings and $100,000 losses → only $90,000 deductible → $10,000 taxable). Self-employment tax is calculated on the resulting net earnings without reducing income for the full amount of gambling losses.
For prior years (through 2025), losses could generally offset winnings up to 100%. Always keep meticulous records, as substantiation is critical, and consult a tax professional familiar with gambling rules, since this area is highly fact-specific and the new 90% limit significantly increases the effective tax hit for pros.
