Latest news with #RussellFox
Yahoo
a day ago
- Business
- Yahoo
Gamblers will have to pay taxes on their losses thanks to provision in Trump's spending bill
The Trump administration's signature spending package contains a little-known provision which could radically upend the gambling industry. Previously, gamblers could deduct all their losses from their declared income, while still having to pay taxes on their winnings. As a result, bettors were only taxed if they walked away from the table with a net profit. But starting next year, under the new bill, which the president signed into law Friday, bettors can only deduct 90 percent of their losses from their declared income. This sets up the potential for people to pay income taxes even if they ultimately came out of their bets at a loss. Insiders warned the change could drive away professional and recreational gamers alike impacting tax revenue. 'Did anyone think this through?' Russell Fox, a Nevada-based accountant specializing in gambling, told The Washington Post. 'They thought: 'We'll bury this somewhere in the bill. No one will see it, and now we've got $1 billion of income to offset $1 billion of tax cuts.'' 'This is bad long-term for the casino industry,' he added. 'It's bad for gamblers. It's actually bad for the IRS, too. We need a less-complex tax system.' Rep. Dina Titus, a Democratic congresswoman who represents Nevada, said earlier this week she would seek a 'legislative fix' to the provision. 'This is just another attack on gaming and tourism and on districts like mine that rely on these industries,' she said in a statement to the Las Vegas Review-Journal. 'This also punishes people who are trying to do the right thing by reporting gambling on their taxes, pushing them towards offshore outlets and the predictions market, which unlike legitimate gambling sources, do not invest in bricks and mortar, pay state taxes, hire union labor, or contribute to problem gaming efforts.' Professional gamblers have also warned about the impact of the provision. 'This new amendment to the One Big Beautiful Bill Act would end professional gambling in the U.S. and hurt casual gamblers, too,' poker player Phil Galfond wrote on X on Tuesday. 'You could pay more in tax than you won. Contact your representative quickly.' Others suggested the provision could push gamblers away from casinos and traditional sports books to online prediction markets such as Kalshi, which in practice often function like gambling but are regulated and taxed differently. Sports betting is legal in 38 states, Washington, D.C., and Puerto Rico. The gaming industry brought in a record high of nearly $72 billion last year, according to the American Gaming Association. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
a day ago
- Business
- The Independent
Gamblers will have to pay taxes on their losses thanks to provision in Trump's spending bill
The Trump administration 's signature spending package contains a little-known provision which could radically upend the gambling industry. Previously, gamblers could deduct all their losses from their declared income, while still having to pay taxes on their winnings. As a result, bettors were only taxed if they walked away from the table with a net profit. But starting next year, under the new bill, which the president signed into law Friday, bettors can only deduct 90 percent of their losses from their declared income. This sets up the potential for people to pay income taxes even if they ultimately came out of their bets at a loss. Insiders warned the change could drive away professional and recreational gamers alike impacting tax revenue. 'Did anyone think this through?' Russell Fox, a Nevada-based accountant specializing in gambling, told The Washington Pos t. 'They thought: 'We'll bury this somewhere in the bill. No one will see it, and now we've got $1 billion of income to offset $1 billion of tax cuts.'' 'This is bad long-term for the casino industry,' he added. 'It's bad for gamblers. It's actually bad for the IRS, too. We need a less-complex tax system.' Rep. Dina Titus, a Democratic congresswoman who represents Nevada, said earlier this week she would seek a 'legislative fix' to the provision. 'This is just another attack on gaming and tourism and on districts like mine that rely on these industries,' she said in a statement to the Las Vegas Review-Journal. 'This also punishes people who are trying to do the right thing by reporting gambling on their taxes, pushing them towards offshore outlets and the predictions market, which unlike legitimate gambling sources, do not invest in bricks and mortar, pay state taxes, hire union labor, or contribute to problem gaming efforts.' Professional gamblers have also warned about the impact of the provision. 'This new amendment to the One Big Beautiful Bill Act would end professional gambling in the U.S. and hurt casual gamblers, too,' poker player Phil Galfond wrote on X on Tuesday. 'You could pay more in tax than you won. Contact your representative quickly.' Others suggested the provision could push gamblers away from casinos and traditional sports books to online prediction markets such as Kalshi, which in practice often function like gambling but are regulated and taxed differently. Sports betting is legal in 38 states, Washington, D.C., and Puerto Rico. The gaming industry brought in a record high of nearly $72 billion last year, according to the American Gaming Association.
Washington Post
2 days ago
- Business
- Washington Post
Lose bets, pay taxes? New bill has some gamblers apoplectic.
A few sentences slipped into the 940-page tax bill approved by Congress this week could force some gamblers to pay income taxes even after losing money. The provision came to light just a few days before the bill cleared the House and Senate this week, surprising industry officials and causing professional sports bettors to fear for their livelihoods. Gary Kondler, a Las Vegas-based CPA who prepares taxes for full-time sports bettors and poker players from across the country, described a week of 'absolute chaos' fielding clients' panicked calls. Until now, gamblers have been allowed to deduct all of their betting losses from their declared income — meaning, bettors who win more than they lose over the course of a year pay taxes only on their profits. The new bill, which the House approved Thursday and President Donald Trump is poised to sign into law, allows gamblers to deduct just 90 percent of their losses while still making them pay income tax on all their winnings. That makes it possible for gamblers who lose money to still owe taxes — at least if report their transactions honestly. Russell Fox, another Nevada-based accountant who specializes in gambling, explained that scenario. Under the new bill, Fox said, a gambler with $950,000 worth of winning wagers and $1 million of losing ones would have to pay taxes on the $950,000 while being able to deduct only $900,000 of the losses — meaning he or she would be forced to pay taxes on $50,000 of 'phantom income' despite having lost that much money in reality. The change poses an existential threat to professional sports bettors, known as 'sharps' because they typically grind out profits from narrow margins, wagering huge sums to make a living. Under the new bill, gamblers who win $1 million and lose $900,000 in a year will be able to deduct just $810,000 of those losses, meaning they will pay taxes on $190,000 despite taking home $100,000. Fox imagined a tourist in 2027 who visits Las Vegas to gamble and breaks even on wagers getting a surprise form in the mail listing taxes owed. 'Did anyone think this through?' Fox said. 'They thought we'll bury this somewhere in the bill. No one will see it, and now we've got $1 billion of income to offset $1 billion of tax cuts.' Congress's nonpartisan Joint Committee on Taxation estimates the deduction limit will generate $1.1 billion in tax revenue over eight years. However, driving away sharps could diminish revenue significantly from the federal excise tax on sports betting: 25 cents for every $100 wagered. Sharps are thought to account for between 25 to 50 percent of money wagered legally on sports. 'This is bad long-term for the casino industry,' Fox added. 'It's bad for gamblers. It's actually bad for the IRS, too. We need a less complex tax system.' The deductions rule came out of the Senate Finance Committee, and the office of its chairman, Sen. Mike Crapo (R-Idaho), did not reply to requests to comment. Ryan Carey, a spokesperson for Sen. Ron Wyden (D-Oregon), the committee's ranking Democrat, said he couldn't explain the motivations behind the change — 'The Republicans wrote this one on their own' — but speculated that it stemmed from an arcane Senate requirement that provisions in tax legislation passed through reconciliation, as this bill was, must have an effect on revenue. Still, an aide to another Democratic member of the committee wrote in an email, 'This provision doesn't make sense!' Rep. Dina Titus (D-Nevada), co-chair of the Congressional Gaming Caucus, pledged to introduce a 'legislative fix,' telling the Las Vegas Review-Journal that the deductions change 'punishes people who are trying to do the right thing by reporting gambling on their taxes.' Titus added that the change could push gamblers toward offshore outlets and 'predictions markets.' One such predictions market is Kalshi, a regulated financial exchange valued at $2 billion that allows Americans nationwide to 'trade' on the outcomes of sporting events, among other things. Critics say the 'trading' distinction enables Kalshi to circumvent gambling regulations. It also means people who make money on Kalshi will owe less in taxes than those who bet with sportsbooks. (Earlier this year, Kalshi named Donald Trump Jr. as a strategic adviser.) Another exchange, Sporttrade, is regulated like a sportsbook but is seeking status akin to Kalshi's. Sporttrade CEO Alex Kane called requiring some gamblers to pay taxes on nonexistent income 'asinine,' adding that the new rule also 'cripples' sharps' ability to earn a living. Rufus Peabody, a well-known professional sports gambler, joked on X that he consulted ChatGPT about what alternate career paths he might pursue 'now that my job has effectively been cut.' A sportsbook employee who caters to 'VIPs,' which is how the industry refers to players who gamble and lose the most money, said the deductions provision benefits sportsbooks that are determined to make it as hard as possible for customers to win money. 'Maybe this is a way to get rid of, I don't know, 75 percent of pro gamblers,' he said, requesting anonymity since he wasn't authorized to be interviewed. 'It could just be as easy as that.' The American Gaming Association sent the Senate Finance Committee a memo in May listing its tax priorities, several of which made their way into the final bill, including a significant increase in the IRS's threshold for individuals reporting slot-machine winnings. Without that, the AGA explained, casinos must shut down slot machines after every jackpot of $600 or more so employees can issue W-2G forms to the winners. Raising the threshold to $2,000 will allow customers to gamble on slots with fewer interruptions. The AGA memo also encouraged Congress to preserve gamblers' ability to deduct all losses from winnings. But while the Senate bill altered that, the AGA was silent, and the trade group declined to comment for this story. After the legislation cleared the House, the AGA released a statement praising the bill while adding, '[We] will work closely with Congress in the coming months to address the changes to wagering deduction losses.' Richard Schuetz, a former casino executive and California gaming regulator who now serves as CEO of American Bettors' Voice, an organization that advocates on behalf of gamblers, scolded the AGA for failing to speak out against the deductions provision until the bill was headed to Trump's desk. 'It confirms what I already believed,' Schuetz said, 'which is that they don't give a f--- about their players.'
