There’s no such thing as a sure bet, but gamblers have long been able to count on the fact that they would only have to pay taxes on their net winnings (total wins minus total losses). However, a new provision included in the recently enacted One Big Beautiful Bill Act (OBBBA) has reduced the amount of gambling losses one can claim from 100% to 90%.
What does this mean for high rollers? Will your annual trip to Vegas or big parlay hit end up costing you even more than going all in and losing to a pair of pocket aces? Before you fold, here’s what you need to know about the phantom tax and what it could mean for your tax bill.
What Is the Phantom Tax?
Critics of this new tax law are calling it a “phantom tax” since it’s a levy on income a taxpayer didn’t profit from, explains Ryan Butler, a senior news analyst at Covers, a sports betting information website.
He poses this hypothetical: Say a gambler wins $100,000 in 2025, but in that same calendar year, he also loses $100,000. In the past, that gambler could deduct 100% of their losses, so it would mean they had zero income from their gambling, and no tax bill on the winnings.
In 2026, when the phantom tax goes into effect, however, the gambler will only be able to deduct 90% of their losses against the wins, so just $90,000. “This means they would have to pay taxes on $10,000 of money they didn’t actually ‘win,'” Butler says.
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Claiming Gambling Losses
So, what does it actually mean to claim gambling losses on your income tax, and can anyone do it?
“In order to claim your gambling losses, you need to itemize your return, which is a pretty large threshold to begin with,” says Brendan Morgan, certified public accountant and owner of Pathfinder Accounting & Tax in Illinois.
In addition, unless you win a big jackpot (or lose your proverbial shirt on a Superbowl bet), it’s not likely that gambling wins and losses would be a significant factor in your tax return.
“This change mostly affects higher net worth individuals who already itemize their returns, who are high-stakes players as well as professional gamblers and sports betters,” Morgan says.
If you do find yourself in this group, however, the larger your losses are, the greater the impact the change could have on your tax bill.
Will the Phantom Tax Hurt the Casino and Sports Betting Industry?
Butler points out that casinos and sportsbooks will not be taxed any differently moving forward. Still, there is some concern in the industry that if big players change their behaviors, it could affect long-term revenue streams.
“The fear from industry stakeholders is that the One Big Beautiful Bill will force poker players, sports bettors and other professional gamblers to play with untaxed, unregulated alternatives, or to leave the industry entirely,” Butler says. “Even a small change in participation from high-spending players could have a disproportionate impact on these businesses’ bottom lines.”
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Is There Any Way to ‘Beat the House’ and Avoid the Phantom Tax?
“Tax filers who itemize gambling deductions will need to continue recording their wins and losses, dates and locations of gambling activity as well as applicable documentation,” Butler says.
So, other than keeping good records, there’s not much else you can do to prepare. “It will become more important to keep an up-to-date wins/loss sheet to make sure that you aren’t caught off guard come tax season due to these changes,” Morgan says.
On a positive note for more casual gamblers, the OBBBA increased the reporting threshold for slot winnings to $2,000 (up from $1,200, where it’s been since 1977), which will mean less paperwork and tax burdens for smaller wins.
One More Hand to Play?
While big-time gamblers are upset about the OBBBA, some lawmakers are trying to reverse the phantom tax before it ever goes into effect.
The bipartisan Facilitating Useful Loss Limitations to Help Our Unique Service Economy — or FULL HOUSE — Act, was the first try, supported by Senators Ted Cruz (R-Texas), Catherine Cortez Masto (D-Nev.), Bill Hagerty (R-Tenn.) and Jacky Rosen (D-Nev.). It was blocked , but Cortez Masto said she would reintroduce it.
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New Phantom Taxes are Coming to Gambling in 2026 – What This Means for Your Winnings and Your Tax Burden originally appeared on usnews.com
