Deputy Editor
It’s looking less and less likely that the FAIR Bet Act will pass in 2025, but the American Gaming Association (AGA) says that there’s still another whole year to repeal unpopular changes to the gambling tax code before they take effect.
Joe Maloney, senior vice president of strategic communications for the AGA, told industry analyst Steve Ruddock on his Straight to the Point Podcast that the goal for gambling advocates now is to get the 100% loss limit restored by the end of 2026. That’s because of the way taxes are calculated in each calendar year for earnings in the previous year.
The Trump administration’s One Big Beautiful Bill Act included a controversial reduction to the allowable deduction for gross gambling losses, from 100% to 90%. Under the change, in theory, a gambler who broke even would wind up paying taxes on money they never won.
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Repeal in 2026 Would Be Enough to Avoid Extra Taxes
Though OBBBA passed with the gambling tax change intact, it was written not to impact taxes filed in 2026 for 2025 gambling income. Conversely, a 2026 repeal bill could be written to apply retroactively to that year’s income. That means it would revert the changes before the 2027 filing season, which is the first point at which the new rules would apply.
In other words, successful repeal next year could mean poker players and other gamblers would never actually be hit by the onerous new law.
“Generally speaking, it’s not great politics to force any number of Americans to pay taxes on phantom income,” Maloney told Ruddock.
The discussion about a possible repeal comes at the same time as a paper published by an advocacy group called American Bettors’ Voice (ABV). In a 37-page study examining possible downstream effects of the tax change, the ABV called it an “existential threat to regulated sports betting.”
Many of the concerns that apply to sports betting also apply to poker.
Poker Players Will Face Taxation Uncertainty Either Way
Despite Maloney’s stated hope to get a repeal done in time to affect filings for 2026, Ruddock noted that poker players and gamblers look set to enter the year in limbo. They can’t know for certain how any gambling wins and losses will be taxed.
“It just bleeds into some uncertainty into 2026,” he said. “If they pass something in July 2026 that repeals it and retroactively reinstates the previous [tax system], gamblers for the first seven month of the year would be a little up in the air about what they would have to pay.”
Kalshi, a site that offers prediction betting, has a market on whether a repeal would go through in 2025. Those hoping for a reversal had some brief hope in late August. Rep. Dina Titus moved to add a repeal to must-pass legislation, and odds spiked as high as 54%.
The optimism proved short-lived. Titus’ effort failed for the moment. Odds on Kalshi plummeted back to 17%, not far from their lowest point since the market opened.
Gambling tax expert Russ Fox told PokerScout in August that proponents for a repeal would continue to try to attach it to must-pass legislation. Maloney echoed that sentiment.
“That bill’s never gonna pass as a standalone,” he said. “Thankfully, we do have that bipartisan support.”
Migration to Offshores, Other Outlets Among Cited Concerns
The ABV paper outlines several possible concerns for the sports betting industry, including migration to offshore gambling and even the possibility of recreational money leaving the ecosystem outright. Some of these concerns carry over to the poker industry.
As with poker, recreational money is the lifeblood of the sports betting ecosystem. Net-losing players in both industries provide the liquidity that supports both the house and the winning players.
Adam Robinson, author of the ABV paper, noted that high-volume recreational and professional bettors generate roughly 80% of the sports betting industry’s handle (total betting volume). If that subset of players begins leaving the ecosystem in droves, the entire system could collapse.
Sportsbooks pay millions of dollars per year in licensing fees and typically operate on pretty thin margins. While they’d still earn money from the remaining players, the lack of volume might sink them.
Robinson outlined three possible migration scenarios, each one delivering a hit to the ecosystem.
- Conservative loss: 12% of total handle
- Moderate loss: 20% of total handle
- Severe loss: 32% of total handle
Similarly, if recreational players decided it was no longer worth it to play poker under the new tax code, poker games may start to dry up.
Sports bettors may also take their business to offshore entities, hurting the regulated industry.
Online poker players have the same option. These operators offer no safety nets in the event of a dispute and have no responsible gambling protections in place. But, poker players may feel more comfortable avoiding taxes on any winnings, safe in the knowledge that these operators aren’t sending any tax info to the federal government.
Prediction Markets Stand to Benefit From Tax Change
Another concern noted by the ABV paper is a possible exodus of sports bettors to prediction markets. While that doesn’t have a direct correlation to anything poker-related, it does raise the possibility of a nefarious force behind the tax change: the prediction markets themselves.
At In Game, Brett Smiley wrote on the possibility:
Many in the industry have suspected that persons associated with Kalshi, or stakeholders sitting on some prediction market upside, pushed for the inclusion of the OBBB gambling tax provision, knowing how it might accelerate a migration away from traditional state-regulated sportsbooks.
And what is an article discussing prediction markets without mentioning that Donald Trump Jr. is both a strategic advisor to Kalshi and an investor in Polymarket, which is poised to soon re-enter the U.S. as a CFTC regulated exchange?
Kalshi now offers numerous markets that are functionally indistinguishable from sports betting.
Such markets have proven quite a boon. They’re almost single-handedly powering site volume on NFL Sundays and have, in part, led to valuations in the billions for Kalshi and competitor Polymarket.
Robinson noted in his paper that the prediction markets are taxed differently than a sportsbook. They’re not subject to the 90% deduction limit. To the contrary, they’ll maintain the 100% deduction on losses, making them more attractive to sports bettors. Customers may continue to migrate there in greater numbers once the calendar turns to 2026, costing federal and state governments billions in projected revenue.
