The new tax law was signed on July 4, 2025. The gambling provisions have little effect on recreational gamblers but are career-endingly serious for professional gamblers. The Gambling with an Edge podcast with Russell Fox about this new tax law was posted July 16, and you can find it on YouTube or in several other places.
There are several possibilities that this law could be changed before January 1, 2026 — and we won’t know for some time if any of these possibilities will come in. While Richard Munchkin expressed optimism in the podcast about one of these avenues for changing the law coming to fruition before January 1, I’m less sanguine about it. I’m preparing for my gambling life as I know it to be over in a few months.
For those unaware of how punitive this new law is for professional gamblers, consider two recent years of mine. In both years my W-2Gs added up to about $6 million. I’m playing high denominations games with a small edge. In one year, my gambling score was -$150,000 and in the other, +$200,000. I have non-gambling income as well. I also record my gambling expenses, which I’m entitled to do as I file as a professional gambler.
In the first year, since I lost money gambling, I paid no taxes on the gambling part of my income. In the second year, I paid quite a bit. Nobody likes to pay taxes, certainly including me, but it’s the price we pay to live in this country.
Under the new law, I would only be able to deduce $5.4 million in gambling losses in each year. (W-2Gs are considered proven gambling wins by the IRS and you can deduct up to 90% of them as losses.) That means in both years (one I lost $150,000 and the other I won $200,000), I would owe taxes on $600,000 of phantom income, in addition to the taxes on my other income. Minus 90% of my gambling expenses, of course, but those came nowhere near $600,000.)
It won’t take many of these tax years to wipe me out completely.
Some people manage to avoid paying taxes by simply lying about how much they make. When you get W-2Gs, though, you can’t lie about them. They go to the IRS and your tax return should claim at least the total dollar amount on the W-2Gs as in on the IRS computers, or they will come after you. In the past, it was always safe to add a few hundred thousand dollars to the W-2G total (because they would all be written off), but starting next year, adding $200,000 to this total will increase the amount you have to pay taxes on by $20,000.
Playing single-line quarters and avoiding W-2Gs altogether is not something I’m interested in. I don’t gamble “for fun.” I gamble for profit and the profit you can make playing games this small are smaller than I wish to seek. I know some of my readers take this route, and I’m not putting them down in any respect, but it’s not the life I want for me.
I’m both planning on exploiting the games I find for the last five months of this year, and planning on what I’m going to do with the rest of my life. This second kind of planning is both more difficult and not as far along as my plans for the rest of this year. It may well include stopping writing this blog. Most of the blog-posts here are inspired by something happening in a casino. If I won’t be in casinos, I’ll simply run out of new things to say. I already repeat myself more than some of you like.
I’ve considered stiffing casinos on my way out the door on December 31, but have decided against it. While the gambling law might not change prior to 2026, there are also possibilities it could change in mid-2026 or later and I want to keep casino doors open to me should that happen. Stopping playing because of the tax law is easy for casino to understand. If they tolerated my action before, they will probably welcome me back. Taking front money and then not playing (so as to maximize my short-term profits on the way out the door) is much harder for casinos to forgive. So, I won’t do it.
One thing I won’t do is to lie around and cry over opportunities lost. I’ve had a longer and more successful gambling career than most, and if it ends in five months, so be it. I’ve saved enough to be set (unless the Doomsday Clock actually strikes twelve, which is definitely possible), so Bonnie and I will make the best of the time we have left together.
And, of course, I will hope the law gets changed soon. If it does, I plan to be ready to go in 2026 right where leave off on in 2025.
if you stop gambling please please do NOT stop writing your column as it is informative.
now to that tax law it will not only hurt individuals but casinos, states, and cities as will due to the taxes they charge etc. also no big players mean less people are needed to handle every thing so what about lay offs etc. the people in congress did not think of the ramification of that law but when do they any way
try to stay healthy
Clearly, the governmental powers that be don’t care who gets hurt with any of their decisions.
There is no way that change stays. In some bill, or one more of the budget reduction bills, it will be gone. The only reason it stayed is they did not want to send it back to the Senate for more debate, when they had the BBB done. It will be gone, most likely before this year is out. There are other reconciliation bills working their way through congress, and that will be included. As for the W2G threshold, that will, most likely, also be adjusted up. There are 2 schools on that. One is raising it higher so W2G’s from a casino are really rare, like $5k, which the casinos want so they can lay off personnel and its less work for them, or $2500, which is still common enough that no one would get laid off. We will see where that goes. I have friends working in Congress, and this is what they collectively say.
I’m wondering where this new rule came from. Any indication that casinos lobbied for it to end professional gambling?
Think long and hard about two things:
1) If Native American casinos are indeed their own countries, ahem, they may simply choose to aid certain players in circumventing the bill. Of course, the players most likely offered a wink and a smile will be non-professionals.
2) People often ask me if something called “the mob” has indeed fled Las Vegas and the casino business. My reply is always the same, “Do you think dinosaurs are actually extinct?” How a person answers that depends on whether they count massively successful evolution into birds as “extinct.”
If you glean what I’m saying, good for you. Sometimes 2+2 does equal 4.
The bill, meanwhile, is what it seems. As Mr. Dancer wrote, it basically smashes all the people dotting their tax i’s. Professional poker players, most of whom kind of pretend to be “professional gamblers” even though they stay above water with tournament sponsorships and YouTube income, are going to be highlighted as pretend gamblers who actually lose 99% of their tax years. They can’t hide what the tax law will do to the small percent of annual winners. The bell curve cut-off for winning just became impossible.
So will they fess up, as Dancer has done, and admit playing poker “for a living” is (and actually has been) damned near impossible? Or will they keep pretending they are winning gamblers as opposed to celebrities who rely more much on name/face recognition than alleged skill to earn money?
As for me, I kept 90% of my sports gambling money offshore because, well, nothing good happens when the feds oversee a business. This did not take long.
Boom, sports betting is legal. The LVA cheers and keeps blurbing about where it’s legal. Bang. A few months later, there goes the proverbial rug from under everyone’s feet. Who didn’t see this coming?
“One thing I won’t do is to lie around and cry over opportunities lost.”
I think that says it best, the mature way to see it all.
And on to “opportunities”: why not just enjoy playing VP for the enjoyment of playing VP? Like playing golf, music, tennis, whatever, for the enjoyment of it, not the chasing money and keeping score with it as the main motivator of “success” or “failure”?
Hello Again Bob. On July 23rd and 24th I was comped at the South Point and ate one night in their coffee shop restaurant for the Chinese Food. I saw a couple sitting a few feet in front of me eating dinner and the white haired man was using a walker. I wondered if it was you? I didn’t come over because I would never bother anyone when they are eating. I had just received my comp for the free buffet and thought of giving it to you and Bonnie, since I don’t enjoy the South Point Buffet. I looked down at it and realized it had my name on it, so I couldn’t give it to anyone to use! Another waste of money by me at the South Point! I will miss your column if you decide to stop writing. You and Bonnie take care and good luck to you in the future!
I have no idea what percentage professional gamblers contribute to the bottom line of casinos. If it’s significant I would think they would rally to get this fixed. If not, I fear it’s all hot air and nothing will be done.
This may be a pipe dream, but could this not be challenged in court? Why would anyone be expected to pay taxes on money not earned? It seem laughable.
“Why would anyone be expected to pay taxes on money not earned?”
You’re playing semantics. It simply comes down to the gov isn’t subsidizing you anymore for 100% of your loses anymore is the beginning and end of it all.
Let it go. Bob has the right mindset.
Let it go ? Why should professional gamblers be treated differently than any other business. This will not last imo.
It will be changed back to 100%.
We already aren’t allowed to carry over losses from one year to the next like most businesses.
But you’re NOT being treated differently, examples, @Grok:
“Many businesses and activities face restrictions on deducting 100% of losses due to IRS rules. Examples include:
Non-Corporate Businesses (EBL Limitation): Sole proprietors, partnerships, and LLCs can’t deduct losses beyond the Excess Business Loss threshold (e.g., $289,000 single/$578,000 joint in 2023), with excess carried forward.
Passive Activity Loss Rules: Losses from passive activities (e.g., rental real estate) can only offset passive income, with excess suspended.
At-Risk Rules: Losses are limited to the amount a taxpayer has “at risk” (e.g., invested capital), with excess deferred.
Hobby Loss Rules: Hobbies (e.g., amateur art or racing) can only deduct expenses up to income, with no loss deduction.
Capital Loss Limitations: Stock traders or investors can offset capital gains and only $3,000 of ordinary income annually, with excess carried forward.
Wash Sale Rules: Stock trading losses are disallowed if similar securities are repurchased within 30 days.
These restrictions, like potential 90% caps for gamblers, limit full loss deductions”.
Rules change, life is dynamic. Let it go, you have no control over it. Listen to Bob Dancer and leave the spilled milk alone.
And while some of the examples given allow carry over losses, what gambler would be happy with having millions of dollars in losses in a year and are faced with whatNon-Corporate Business EBL Limitation example #1 are faced with? That gambler would be “out of business” even faster than the 90% rule with the thresholds of $289k/578k limitations I’d bet….but it exists for lots of other businesses and they deal with it. And the $3k max annual losses allowed against ordinary income for stock losses? Someone loses $50k on a stock with no other stock gains to offset that loss, you know how many years that would take to write off against ordinary income? Talk about something to truly complain about! Yet it all exists. 90% rule in comparison sounds pretty darn good I think. Perspective element time perhaps.
I’d say this is likely to stay as written. There are reasons, besides a Utah whack job, why this made it into the bill. Those “reasons” will apply as much or more leverage as any sudden amalgamation of gamblers arguing the other way.
The fascinating aspect to this from my perspective is what myriad of excuses and rationales “professional gamblers” such as poker players will find to continue playing despite the statistical hammer coming down. The cognitive dissonance researchers should have a field day.
Dancer stated the unpalatable. The best gambling right now is “illegal” gambling.
I have always said that if standard straight sports betting went to 6/5 (as I dealt with when I was 17 and what Hawaii has always had), I was done. Time to spend time doing other things. That’s what this bill does to all gambling. It hammers you into 6/5 blackjack or -120 sports betting range. No sense straining your brain trying to beat it or coming up with excuses as to why you should still play. Take your wallet and go illegal or go home. Pretty straightforward.
Dancer has got this right.