Can Casino Players Deduct Gambling Losses on Their Taxes The New 90% Rule Under the One Big Beautiful Bill Act (2026)
- Alejandro
- Feb 11
- 3 min read
The gambling industry in the United States is undergoing one of the most significant tax changes in decades. With the passage of the One Big Beautiful Bill Act (OBBBA), taxpayers who earn income from casinos, sports betting, lotteries, or other forms of gambling will face new rules when reporting their losses.
This change affects both recreational and professional gamblers, and understanding how it works is essential to avoid paying more taxes than necessary.
What Exactly Changed?
Through the 2025 tax year, gamblers were allowed to deduct 100% of their gambling losses, as long as those losses did not exceed their winnings. Beginning in 2026, however, the law establishes that: Only up to 90% of total gambling losses may be deducted.
This means that even if a player breaks even (wins the same amount they lose), they could still end up owing taxes.
Real-world example under the new law:
Winnings: $100,000.
Actual losses: $100,000.
Deductible losses (90%): $90,000.
Taxable income: $10,000.
This situation creates what many experts refer to as “phantom income”: paying taxes on money that was never actually earned.
Who Is Most Affected?
Professional gamblers
Poker players, sports bettors, and high-volume gamblers are among the most impacted. Their profit margins are often thin, and this rule can artificially inflate their taxable income.
Recreational gamblers
Even occasional players may end up with taxable income despite having no real net winnings.
Foreign nationals and expatriates
Nonresident aliens may only deduct U.S. source gambling losses and are also subject to the 90% limitation.
U.S. expatriates may face taxation without a foreign tax credit, since many countries do not tax gambling winnings.
What Proof Does the IRS Require to Validate Gambling Losses?
The IRS enforces strict rules when it comes to accepting gambling loss deductions. To deduct losses, taxpayers must:
Maintain a detailed gambling diary or log
Including dates, locations, type of gambling activity, and amounts won and lost.
Keep supporting documentation, such as:
Betting tickets or receipts.
Bank statements.
Forms W-2G.
Casino statements or player card records.
Itemize deductions on Schedule A
If a taxpayer claims the standard deduction, they forfeit the right to deduct gambling losses.
What Did NOT Change?
Gambling losses may still only be deducted up to the amount of gambling winnings (in addition to the new 90% cap).
Gambling losses cannot be used to offset other types of income, such as wages, interest, or business income.
Is It True That Losses Can Only Be Reported “Up to 90%”?
Yes, this is correct but with technical precision. The IRS does not “allow reporting losses up to 90%”; rather, it only allows deducting 90% of actual gambling losses, and only up to the amount of gambling winnings.
This rule is established under Section 70114 of the One Big Beautiful Bill Act, which modifies the limitation on wagering losses.
What Should Gamblers Do to Protect Themselves?
Practical recommendations:
Keep a daily gambling log.
Use player cards to obtain official casino reports.
Save all withdrawal and deposit records.
Avoid mixing gambling funds with personal expenses.
Consult a professional tax preparer before filing.
Conclusion
The new 90% gambling loss deduction rule fundamentally changes how gamblers must plan their taxes. For many—especially professional gamblers—it may result in owing taxes even when no real profit was made.
The key will be thorough documentation, itemizing deductions, and seeking professional guidance to avoid issues with the IRS and ensure compliance under the new law.
Sources
TFX – Major gambling tax changes in the One Big Beautiful Bill Act.
Casino.org – Gambling Deduction capped at 90% starting 2026.
IRS – Topic 419: Gambling Income and Losses.
LegalClarity – Are Gambling Losses Deductible? Tax Rules & Limits.
PROFESSIONAL TAXES LLC.
480-3430299
3162 E Roeser Rd. Phoenix, AZ. 85040
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