The version of President Donald Trump's “Big Beautiful Bill” passed by the Senate earlier this week contains a tax provision that could prove prohibitive to gamblers, with ramifications for horse racing's bottom line.
In the Senate's version of the bill, deductions for gambling winnings will be limited to 90% of annual losses. Currently, gamblers can deduct 100% of wagering losses (below a net profit) for any given year.
As NBC Sports describes it, “$100,000 in winnings against $100,000 in losses will be treated for tax purposes as if the losses were only $90,000.”
The specific language in the bill can be found at section 70114, “Extension and modification of limitation on wagering losses.”
The House is currently voting to concur their version of the bill with the Senate.
“It is a big deal,” said Tom Rooney, CEO and president of the National Thoroughbred Racing Association (NTRA), who pointed to the possible impacts on horse racing revenues through gambling dollars throughout the sport, and especially those jurisdictions with no supplemental revenues.
Rooney said he's working with representatives from other key gaming entities to petition lawmakers on the issue, including the American Gaming Association.
“We've let it be known to our friends on the Hill that our sport is generated by the people that play the horses. And, if they're dissuaded in any way to do that, it's going to hurt our sport,” said Rooney.
In an online post on the social media platform known as X, professional gambler Phil Galfond warned how the proposed gambling tax change could have major ramifications on high-volume gamblers, with ripple effects on industries like horse racing.
“Let's say that over the course of all the sessions we play throughout the year, we won $5.2 million and we lost $5 million for a net of $200,000,” said Galfond in his post.
“Now we would pay as if we won $5.2 million minus 90% of $5 million, which is $4.5 million, for a fake net of $700,000. So, you would make $200,000 during the year, [but] you would pay tax as if you made $700,000. Meaning, in almost everybody's case you would pay more tax than you made during the year,” said Galfond.
That is “completely untenable,” said Galfond. “You can't be a professional gambler in the U.S. if this goes through. And that will have a ripple effect on industries that depend on professionals [gamblers].”
While the House can add no new language to the bill, verbiage can be stripped.
A previous version of the bill in the House contained key tax provisions that would have been detrimental to many horse racing stakeholders. But Rooney said that they were able to remove that through lobbying efforts.
“Whether or not they can change language this late in the game is very tough,” said Rooney, about efforts to strip the latest gambling tax language from the current iteration of the bill.
“People ask, why are they moving this gambling tax from 100% to 90%, it's because of revenue, and just trying to find money wherever they can,” said Rooney.
Large tax cuts–which primarily favor the nation's wealthiest–and spending increases on the military and immigration enforcement are offset by huge cuts to the social safety net including to Medicare and to children's food assistance programs.
These cuts aren't enough to balance the budget, however. Independent analysis of Trump's “Big Beautiful Bill” found it would increase the already ballooning national debt by $3.3 trillion over the next 10 years.
Reached late on Wednesday, Rooney said at that time he understood the bill would not be changed to remove the gambling tax language. “Final passage is uncertain,” he added, of the entire budgetary package.
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