DraftKings CEO Jason Robins isn't exactly known for being a wallflower when it comes to regulation, but his recent teardown of a specific provision in the 2025 federal tax overhaul—the "One Big Beautiful Bill" (OBBBA)—is more than just corporate griping. He's calling it "very strange." I'd go a step further. It's mathematically broken.
If you've ever placed a bet, you know the house already has an edge. But starting in 2026, the IRS is basically asking for a seat at the table where they only collect when you win and still bill you when you lose. It sounds like a bad fever dream, but it's the new reality for American bettors.
The Death of the 100 Percent Deduction
For decades, the deal was simple: if you won $5,000 at the track but spent $5,000 to get there, you were at zero. You didn't pay taxes on the winnings because the losses canceled them out. It's the most basic form of accounting there is.
But the OBBBA, signed into law on July 4, 2025, changes that math completely. Beginning January 1, 2026, the IRS will cap gambling loss deductions at 90 percent of winnings.
Why 10 Percent Matters
This isn't just a slight haircut. It's a fundamental shift in what the IRS considers "income." If you break even, you're now a "winner" in the eyes of the tax man.
- The Old Rule (Pre-2026): Win $1,000, Lose $1,000 = $0 Taxable Income.
- The New Rule (2026+): Win $1,000, Lose $1,000 = $100 Taxable Income.
You're paying taxes on "phantom income" that never touched your bank account. As Robins told CNBC's Jim Cramer, "If you can't deduct all your losses, how does that make sense that you pay income tax on something that's not actually income?"
A Survival Guide for Professional Gamblers
If you're a casual bettor who puts $50 on the Super Bowl, this might not keep you up at night. But for the pros—poker players, sports bettors, and high-volume horse racing fans—this is an existential threat.
Take a professional poker player who wins $5.2 million in pots throughout the year but spends $5 million on buy-ins. Their actual profit is a healthy $200,000.
Under the 2026 rules:
- They win $5.2 million.
- They can only deduct 90% of their $5 million in losses ($4.5 million).
- The IRS says they made $700,000.
They made $200,000 in real life, but they're being taxed on $700,000. If their tax rate is 30%, they'd owe $210,000 in taxes. They'd literally lose money by winning. ### Professional Survival Tactics
The reality is that "pro" status doesn't protect you here. The OBBBA's 90% cap applies broadly, and it actually pulls more people into the "itemized deduction" trap. If you don't itemize, you can't deduct any losses at all. But even if you do, you're still losing that 10% buffer.
Why This Provision Even Exists
So why did this happen? It wasn't some calculated strike against the gambling industry. It's mostly about the "Byrd Rule."
In the chaotic process of budget reconciliation, lawmakers had to find ways to "pay" for the massive tax cuts elsewhere in the bill. They needed to hit a specific revenue target to avoid a filibuster. Capping gambling losses at 90% was a technicality—a "plug" to make the numbers work on paper.
The Joint Committee on Taxation thinks this will raise about $1.1 billion over 10 years. That's a rounding error in the federal budget, but it's enough to potentially bankrupt thousands of professional bettors.
The Hidden Fallout for the Industry
Robins and other gaming execs aren't just worried about their customers' tax bills; they're worried about the ecosystem. When the math doesn't work for high-volume players, they don't just "lose more." They stop playing.
- Liquidity Drain: In poker and sportsbooks, you need high-volume players to keep the "pools" large. If the pros exit, the casual experience gets worse.
- The Offshore Migration: If the legal US market becomes mathematically impossible to beat, bettors will go back to unregulated, offshore sites. The IRS won't see a dime of that money.
- The Ripple Effect: Horse racing, in particular, depends on high-volume bettors who move millions of dollars through the system on thin margins. This tax change could effectively end professional handicapping in the US.
Is a Fix Actually Coming?
There's some hope on the horizon. Even some of the bill's biggest supporters are starting to blink. Rep. Jason Smith, Chairman of the House Ways and Means Committee, has already admitted the provision was a "mistake" and said he's committed to a fix.
Nevada Congresswoman Dina Titus has also introduced the FAIR BET Act, which would restore the 100% deduction. It's a bipartisan push because nobody wants to be the one who killed the Golden Goose of legal sports betting revenue for the states.
What You Should Do Now
Don't wait for Congress to fix it. If you're betting significant volume, you need to tighten up your record-keeping immediately.
- Keep a detailed log: The IRS is already ramping up audits on gambling income. You need a daily log of every session, including the location, date, amount won, and amount lost.
- Save everything: Tickets, receipts, betting slips, and bank statements. If you're going to fight for that 90% deduction, you'd better have the receipts to prove your 100% losses.
- Consult a pro: If your "handle" (the total amount you bet) is in the six or seven figures, you need a tax professional who understands the OBBBA.
This tax law is a mess, and it's likely to change again before 2027 filing season. But for now, the house isn't the only one with an edge you can't beat.
The smartest thing you can do today is pull your win/loss statements from every app you use—DraftKings, FanDuel, BetMGM—and see exactly where you stand under the new 90 percent rule. If your tax bill looks like it's going to swallow your profits, it's time to rethink your strategy before 2026 kicks in.
