As Playing Apps Develop, Bettors are Slated to Owe Extra in Taxes This Yr

You possibly can’t watch a sporting occasion, hearken to a podcast, or open social media with out being served some form of promoting for betting, whether or not it’s the now broadly proliferated sports activities betting apps like FanDuel and DraftKings or the quickly rising “prediction markets” like Polymarket and Kalshi. However if you happen to’re simply beginning to get into playing, you’re going to get hit for extra than simply your losses. As of January 1, 2026, the federal tax code will change to restrict the deductions gamblers can tackle their losses.

The change, which was a part of the Republican-authored and Donald Trump-supported One Massive Lovely Invoice signed into legislation this summer season, will impose a tax cap that limits playing loss deductions to 90% of winnings, down from 100% in earlier years. That can go into impact for 2026 revenue. So whereas it received’t essentially affect your 2025 tax filings, it’ll hit gamblers once they go to file their taxes for 2026 come April of 2027.

The brand new rule means you can nonetheless deduct your playing losses, however solely to offset as much as 90% of your winnings. How does that work in observe? Let’s say you place a sequence of bets. You win $1,000 off these, however you additionally lose $1,000 on others. You possibly can solely take 90% of these losses as deductions, which implies that you can owe the federal government $100 in taxes though you technically broke even on the bets.

There are efforts to alter this. Native Las Vegas affiliate Fox 5 reported that an effort in Congress to move a invoice known as the Fair Bet Act would restore the 100% deduction that was in place up to now. However there’s no assure that passes. One would assume that the Trump administration would again the invoice, because it has the help of massive gamers within the playing trade. However issues get a little bit difficult with the introduction of prediction markets.

Trump has a extra direct tie to these markets, as his son Donald Trump, Jr. is an investor in and advisor of Polymarket. However nobody actually is aware of at this level if bets positioned on prediction markets truly depend as playing winnings and losses. Prediction markets have carved out a distinct segment which have separated them legally from different playing platforms as a result of customers are technically shopping for and promoting monetary “contracts” fairly than betting on an end result primarily based on a line decided by a sports activities guide. It’s a distinction with no distinction for his or her wallets, as people continue to lose money on their bets, however the distinction does imply prediction markets aren’t topic to among the identical restrictions as betting apps—therefore why the betting platforms are all launching prediction markets now.

That distinction is already beginning to current new questions in relation to taxes, and there’s little clarity among tax professionals as to tips on how to deal with prediction market bets. There’s extra readability within the eyes of the prediction market operators, if you happen to can consider that. Coinbase recently put out a report suggesting that prediction markets might turn into a “extra tax-advantageous substitute” to sports activities betting as soon as the less-friendly playing deductions rule goes into impact. Who “the home” is may be altering, nevertheless it looks like the home nonetheless all the time wins.