The New Law That Could Kill Legal Sports Betting in America
Congress just passed a provision that could destroy professional gambling in the U.S. Today's newsletter breaks down what it all means (and why some sportsbooks appear to be cheering it on).
The recently passed "One Big Beautiful Bill Act" contains a provision that could fundamentally destroy professional gambling in the United States and drive millions of bettors to unregulated offshore markets.
Under current tax law, gamblers can offset 100% of their losses against their winnings, meaning someone who wins $100,000 and loses $100,000 in the same year pays no taxes on their gambling activity. However, buried within the 940-page piece of legislation that President Donald Trump signed into law last Friday is Section 70111, stating that gambling loss deductions will now be capped at 90% starting next year.
That means that the same gambler mentioned above — $100,000 in winnings and $100,000 in losses — will now be taxed as if they made $10,000 in profit. At a 24% federal tax rate, that’s a $2,400 tax bill (on what is in reality zero profit). In short, gamblers will now effectively be taxed on the volume of activity, not actual income.
This seemingly small change will impact nearly every facet of the sports betting industry. Professional gamblers will see their already incredibly thin profit margins wiped out. Recreational bettors will face worse odds and have access to fewer contests or big-money jackpots. Casinos and sportsbooks will see their volume nosedive, potentially widening margins through same-game parlays to offset the decline. States that have changed their online sports betting policies over the last seven years to increase tax revenue will now have to find new ways to generate economic activity.
This is a monumental change that not nearly enough people are talking about. So, today’s newsletter will explain how this law could trigger a chain reaction that could potentially lead to the industry's destruction, what it means for recreational sports bettors who casually wager on games, and what can be done about it now. Let’s dive in.