Trump’s gambling tax plan sparks industry uproar

The proposed $1.1 billion tax hike in Donald Trump’s "Big Beautiful Bill" has sent shockwaves through the US betting community. Professional gamblers and those who like high-stakes betting warn that the increased costs could drive them out of the gambling industry.

The American Gaming Association mentioned that commercial gaming revenue in the US reached record highs in recent years as legalised gaming spread across thirty-eight states, including Washington, D.C., and Puerto Rico. In 2024, the US revenue reached nearly $72 billion, which is not the first record-breaking year.

In a recent statement, the American Gaming Association said, “We commend congressional leaders on the passage of the One Big Beautiful Bill Act.” They also added, “Our industry’s ability to sustain quality jobs and deliver economic benefits is significantly enhanced by the tax policies of OBBBA that support consumers, encourage business innovation and investment, and strengthen US competitiveness.”

Trump's tariff plans already had a huge impact on gambling stocks. So, what is the plan here?

Will this kill pro gambling?

This new bill forms part of Trump’s broader economic package, which includes stricter financial reporting requirements and higher taxes on gambling winnings. This will include those who make a living from sports betting and daily fantasy sports. Major sportsbooks might be able to absorb the hit, but individual bettors fear a catastrophic impact.

Let’s look at an example of how this new law will work:

• Winnings - $100,000, Loses $100,000, Owing $10,000 tax
• Winnings - $200,000, Loses $210,000, Owing $11,000 tax, because the deduction would be capped at $180,000

Nelson Rose, a law professor at Whittier Law School, said, “Professional and high-stakes poker players, sports bettors and handicappers are about to be taxed out of business, either that or they will move their action overseas to foreign jurisdictions that don’t report gambling winnings to the IRS.”

A recent study revealed that in 11 states where sports betting was legalised, players increased their betting from 99 cents to $4.63 per month. Over the past five years, the vast majority of players deposited less than $20,500 in their accounts. This means that for the casual player, the direct impact is negligible.

Professional bettors are in panic mode

Many critics argue that this shifts the odds heavily in the government’s favour, not the bettor’s. “It is a death sentence for those who bet for a living”, one said.

Big names in the industry were quick to respond, and sports bettor Captain Jack Andrews said the move “completely wipes out any margin professionals work with.” One player who has won more than $10 million in live poker tournaments said that the gambling provision “will kill gambling, even for professionals. This will negatively impact thousands.”

Professional poker players stand to be the most at risk due to their reliance on high volume and marginal profits. Poker accounts for only 1% of the online gaming revenue in the US, and the potential financial damage to publicly traded gaming companies is limited, even if the impact on players is substantial.

Not everyone is losing sleep

Interestingly enough, not all stakeholders are ready to oppose the bill. The American Gaming Association (AGA) has voiced its support, indicating the benefits for large casino operators and the government. The AGA argued that the bill streamlines tax reporting and could strengthen regulated markets.

Some big names in the industry, like DraftKings and FanDuel, may take a short-term hit, but they are unlikely to suffer long-term consequences since most of the sportsbook revenue comes from net-losing players. However, the smaller, offshore operators, and most importantly, the players, are the ones in the firing line.

For online and brick-and-mortar casinos, the new bill is structured to generate consistent profits for the house. The platforms that operate on a take-rate basis, similar to poker, avoid classification as "wagering" under the proposed tax framework. This exemption could render them an attractive alternative for high-bettors and professional players aiming to avoid high taxation.

The bill also includes a change in how companies can deduct interest expenses, switching from EBIT to EBITDA as the base metric, and this would have a neutral to slightly positive effect in the industry, depending on a company’s leverage profile.

Global implications for sports betting

Another beneficiary is the predictions market, which is not regulated the same as gambling, such as Kalshi.com, who provide hosts "trades" about predictions like who might be the next president. Donald Trump Jr. said he became a strategic adviser to Kalshi in January after trading on the prediction of his father's historic win in the 2024 Presidential election, while "biased outlets called the race a coin toss."

If this tax bill is adopted, it could open the door for similar aggressive tax policies elsewhere. It remains a concerning signal for the global gambling markets and the sustainability of professional betting careers.

Who’s really paying the price?

Trump's "Big Beautiful Bill" with the tax changes may sound abstract, but the real-world consequences are anything but that. Let's look at the real cost and who is left paying the bill.

Gambling is being treated as a casual hobby rather than a profession. For many professional gamblers, betting is no different to trading stocks or managing portfolios. Yet, this bill draws a line, effectively shutting the door on anyone trying to make a living through legal, skill-based wagering.

When tax law ignores the reality of how betting works, it risks killing the very industries it seeks to regulate. They are treating professional betting like a get-rich-quick scheme that does more harm than good. But the fight is not over yet. Unfortunately, for many, the damage may already be done.

Tips and tricks for surviving Trump's gambling tax shake-up

Believe it or not, there are still ways to navigate the tax chaos. Let's look at some essential tips and tricks to help you stay ahead of the changes and how to protect your profits.

• Track every bet: Keep detailed records to log every win and loss. This will give you peace of mind, as it provides full transparency. You will also need accurate records if you plan to dispute any discrepancies.
• Restructure legally to your advantage: Consider forming a legal business entity. While this won’t eliminate the tax burden, it might offer new deductions and allow you to restructure your income in a way that is more favourable under the US tax law.
• Work with a gambling-savvy tax professional: Not all accountants understand gambling income, especially at a professional level. Getting a tax expert who is familiar with the betting industry will be a big advantage.
• Shift towards low-variance markets: High-variance betting and volatile poker sessions may look thrilling, but could now carry disproportionate tax risk. Rather, focus on markets with a more consistent return, such as player props and match betting.

This new bill does not have to be the end of your professional gambling career. With the right strategy and mindset, professional bettors can still find success. Think of this not just as damage control, but as a chance to grow your betting as a profession.