The Hidden Tax in the Budget
The budget reconciliation bill passed by the Senate has some unexpected consequences, particularly for professional gamblers and poker players. A change in the tax code will limit the amount of losses they can deduct, effectively increasing their tax liability. The new provision, Section 70014, will cap the deduction at 90% of losses, which means that individuals who break even or incur losses will be taxed as if they made a profit. This change has sparked concerns among professional gamblers and poker players, who argue that it’s a stealth tax increase that targets small business owners.
How the New Provision Works
The provision is as follows: if you win $100,000 playing poker and lose $100,000 in the same year, you will be taxed as if you made a profit of $10,000. For example, Phil Galfond, a professional poker player, explained the rule change:
“Let’s say that over the course of all the sessions that we played throughout the year, we won $5.2 million and we lost $5 million dollars for a net of $200,000. Now, we would pay as if we won $5.2 million, minus 90 percent of $5 million, which is $4.5 million for a fake net of $700,000. So you would make $200,000 during the year and pay tax as if you made $700,000.”
This means that someone who actually won $200,000 would be taxed as if they won $700,000, which is an unacceptable tax burden.
Why This Matters to Conservatives
This change affects several key conservative principles. Firstly, it’s a tax increase disguised as tax reform. The provision is estimated to net the government $1.1 billion through 2034. Secondly, it’s government picking winners and losers. The change disproportionately affects individual entrepreneurs who make their living playing poker or betting on sports, whereas casino owners and large gambling companies are not affected. Finally, it’s terrible policy that will push Americans toward illegal markets. The amendment could drive professional gamblers toward offshore, unregulated gambling operators, rather than keeping the activity in America where it’s regulated and taxed. This is a recipe for disaster, as it will lead to lost revenue for the government and potential harm to the economy.
Real-World Impact
This provision will not only affect professional gamblers but also casual players who have a good year but then a bad year. The loss of tax benefits will be a significant burden for these individuals, who may not have the means to absorb the increased tax liability. Poker player Doug Polk pointed out that this will negatively impact thousands of Texans, while professional gambler Rob Pizzola emphasized that this is not just a problem for high-rollers, but for everyone. Even casino owners are speaking out against the provision, as it will hurt their business and the economy of Nevada, which relies heavily on gaming.
Critics Weigh In
Nevada Democratic Congresswoman Dina Titus has called the provision “a provision that was slipped into the Senate amendment” and said she’s working on a legislative fix that fairly treats gaming losses in the tax code. The American Gaming Association, which represents the casino industry, has not commented yet, but individual casino owners are speaking up against the provision.
What’s Next
The House version of the bill does not currently contain provisions concerning professional gambling, so there’s still time to fix this. The House has to approve the Senate’s changes before President Trump can sign the bill. Trump has expressed his hope that Congress can pass the bill by July 4, but he acknowledged that this deadline would be “very hard” to meet.
Why Government Shouldn’t Pick on Gamblers
Conservatives should oppose this provision for several reasons. Firstly, it’s a stealth tax increase on small business owners. Secondly, it drives American business overseas to unregulated markets. And thirdly, it shows how the government can sneak tax hikes into popular bills when nobody’s watching. Gaming is a legal industry that employs hundreds of thousands of Americans. Professional gamblers are entrepreneurs running small businesses. They deserve the same fair tax treatment as any other business owner.
What You Can Do
Call your representative in the House and tell them to remove Section 70014 from the budget bill before they vote on it. This provision wasn’t in the original House version, so there’s no reason it needs to stay. If you live in a state with casinos or legal gambling, this affects your local economy. Nevada, New Jersey, Pennsylvania, and other gaming states will lose business to offshore sites. This is exactly the kind of government overreach that conservatives should oppose. It’s a hidden tax increase that hurts small business owners and helps foreign competitors. That’s not making America great again.
