Published on: January 1, 2026, 12:09h.

Updated on: January 1, 2026, 12:09h.

• A new year heralds changes in federal tax regulations
• Two gambling tax provisions highlighted in the “One Big Beautiful Bill”

As we step into 2026, lottery players, casino enthusiasts, and sports gamblers face fresh tax considerations.

The enactment of the “One Big Beautiful Bill Act” by Congress, later signed by President Donald Trump, introduces two key tax changes pertaining to gambling.

Yet, it’s important to note that some states may still require casinos to suspend play on machines for wins exceeding $1,200 due to existing local tax laws. Nonetheless, this win won’t be reported to the IRS for the purpose of federal tax filings.

This change in the threshold is also expected to benefit casinos, minimizing the downtime of their machines and reducing the need for staff to respond to $1,200 wins.

Changes to Gambling Deductions

A more significant amendment regarding gambling taxes within the Republicans’ legislation is the limitation on the deduction of gambling losses against winnings starting from the 2026 tax year, now capped at 90%.

According to Section 70114, known as the “Extension and Modification of Limitation on Wagering Losses,” it states:

“For loss claims from wagering, the allowable deduction for any taxable year shall equal 90% of such losses in that year, provided it does not exceed profits from these wagering activities in the same year.”

This implies that if a gambler earns $100K playing various games but also incurs $100K in losses, they can deduct only 90% of their losses from their winnings. Consequently, they would still owe federal taxes on $10K.

Certain markets, like prediction markets regulated by the Commodity Futures Trading Commission as derivatives, will not be affected by this gambling tax update, potentially attracting more sports bettors to these less-regulated venues, despite industry pushback claiming they operate outside of regulated sports betting frameworks.

Potential Retroactive Adjustments for 2026

The Congressional members from Nevada are advocating for a restoration of the gambling deduction to its full capacity of 100%. Representatives Dina Titus and Senator Catherine Cortez Masto warn that reducing this deduction could drive gamblers to unregulated offshore sportsbooks and casinos, which tend to lack proper consumer protections and often do not report winnings to federal authorities.

Both Titus and Cortez Masto support the FAIR Bet and FULL House acts, which seek to reinstate the gambling deduction fully. These proposals could implement retroactive measures, potentially modifying the 2026 tax regulations to take effect from January 1, 2026.