A Surprising Problem Hidden in the Budget

A new provision in the Senate's budget reconciliation bill will limit the amount of losses gamblers can deduct, increasing their tax liability.

The provision, Section 70014, will cap deductions at 90% of losses, affecting professional and casual gamblers alike.

If a gambler wins and loses the same amount, they'll be taxed as if they made a profit, even if they broke even or incurred losses.

Phil Galfond, a professional poker player, explains that the rule change would tax someone who won $200,000 as if they made $700,000.

This provision is estimated to net the government $1.1 billion through 2034.

Conservatives argue that this is a tax increase disguised as tax reform, targeting small business owners and harming the economy.

The provision disproportionately affects individual entrepreneurs who make a living playing poker or betting on sports.

The change could drive professional gamblers toward offshore, unregulated gambling operators, rather than keeping the activity in America.

Nevada, New Jersey, Pennsylvania, and other gaming states will lose business to offshore sites as a result of this provision.

You can make a difference by calling your representative in the House and telling them to remove Section 70014 from the budget bill.