Don't get excited just yet, this is still just an "idea". U.S. President Trump recently expressed to reporters on Air Force One that he is considering whether to cancel the federal income tax on gambling profits. This statement suddenly pushed the topic of U.S. gambling taxation, a professional issue concerning the wallets of millions of players, to the forefront of public debate. It is worth noting that nearly 60% of American adults have gambled in the past year, and commercial gambling revenue reached $110.3 billion in 2024, which is no small figure. According to the PASA official website, this is not just a tax issue, but also affects the industry ecosystem, player behavior, and even the sensitive nerves of public finance.
Trump's casual mention and the serious reality of taxation
Trump's original words are quite intriguing. He said: "We don't tax tips, we don't tax Social Security benefits, we don't tax overtime pay. (So) not taxing gambling profits? I don't know, I have to think about it." He then added, "I have to think about it," and the conversation ended due to turbulence. Although this was just an informal statement and far from becoming a bill, it was enough to make both insiders and outsiders prick up their ears.
This is against the backdrop of last year's "One Big Beautiful America Act" (OBBBA), which exempted tips and overtime pay from taxes, and is estimated to potentially add $3.4 trillion to the federal deficit over the next decade. Trump's remarks seem to be testing the possibility of including gambling profits in this "tax exemption list".
Current "game rules": Easy to win money, complicated to report taxes
So, what exactly is the current federal gambling tax? According to the rules of the IRS, all gambling income must be reported. When a single profit exceeds $600 (under specific circumstances), the operator will issue you a W-2G form; if the profit exceeds $5,000, it is usually subject to a 24% federal income tax withholding. If you do not provide a Social Security number, this withholding rate may jump to 28% or even 31%.
Moreover, starting from 2026, the rules will tighten. Currently, players can use gambling losses to offset profits, but the new rule will limit the deduction cap to 90% of the reported profits. This could have a significant impact on professional poker players or frequent bettors, such as Poker Hall of Fame member Erik Seidel, who has publicly stated that this might make it difficult for him to maintain full-time card playing.
Various "calculations" and potential controversies
Eliminating federal gambling taxes sounds wonderful, but in practice, it involves many aspects. The government's wallet is at the forefront: although the IRS does not publish gambling tax revenue separately, with an annual industry scale of over $100 billion, even if the effective tax rate is not high, the total amount is still in the billions of dollars. If this money is gone, where will it come from?
Supporters believe that tax exemption could make legal gambling platforms more attractive compared to offshore black sites, perhaps guiding players back to the regulated market. However, critics worry that this might indirectly encourage gambling behavior, especially among the growing group of young men who gamble online. Meanwhile, Congress members are still wrestling over whether to overturn the "90% loss deduction" new rule.
At present, everything is still at the "idea" stage. Trump's casual mention has ignited a discussion full of possibilities, but it is still a long way from becoming a reality in law, with lengthy legislative procedures and financial assessments ahead. To track such policy trends that could profoundly affect the gambling market, consider continuously following updates and analyses on the PASA official website.
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This article is from "PASA-Global iGaming Leader" gambling industry news channel:https://t.me/pasa_news
Original in-depth gambling channel:https://t.me/gamblingdeep
Free data reports: @pasa_research
PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
