Here's what I posted on my PFA site about it....

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Many of the people clutching pearls are either losing gamblers, non-gamblers, or ones who blatantly lie to the IRS about their wins-losses anyway.

There's confusion about this law.

It does NOT limit your loss deduction to 90% of your winnings. That would be an absolute disaster, as everyone would be responsible for gambling taxes, even those who get absolutely destroyed by the casino.

Instead, it is essentially a reduction to your loss claim. So whatever you claim is a loss against your taxable winnings, you now have to multiply that number by 0.9 first.

So here's how it would work:

If you won $100k and lost $100k, your tax liability would be on $10k of gambling income, despite breaking even.

If you won $100k and lost $112k, your tax liability would be zero. That's because your claimed gambling income would be $100k - (0.9 * $112k), which equals less than zero.

If you won $900k and lost $800k, your tax liability would be on $180k worth of gambling income, despite only being up $100k. That's calculated by $900k - (0.9 * 800k).



From what I can tell, nothing else changes. Much of this is self-reported, especially poker cash game results.

The burden of proof is on the IRS, not you.



Finally, there's the matter of "sessions". The above does NOT apply to sessions, which are accounted for by strictly subtracting losses from wins.

For example, if I won $200k in a session but lost the $200k back in the same session, my session income would be 0, and this 90% loss reduction would not apply. So this would be entered into the records as a $0 win, and thus not affect taxes.

But what defines a session? The IRS isn't clear, and has never been clear. And that leaves a lot open to interpretation.

If you're on a gambling trip and win the first day but lose the second, how many sessions is that? One? Two? More?

If you go to dinner in the middle of gambling and take 3 hours, is it considered the same session when you resume?

What about online poker? If you remain logged in for the entire year, can you claim it's one long session? And if it's based upon logins, what if you're in the middle of playing and your computer crashes, and you restart it? Is that a new session, or a continuation of the old one? If you're sitting and waiting for opponents to sit with you heads up after a match is done, and finally one sits with you 6 hours later, is that a new session or the same session?

Without accurate definitions from the IRS, gamblers can rely upon broad definitions of "sessions" to somewhat neuter this new law (and do so legally).



Finally, there's the matter of audits.

Very few pro gamblers get audited. As you might imagine, I know a LOT of pro gamblers -- through poker, sportsbetting, and casino advantage play worlds. Of all those gamblers, very few have been audited due to their handling of their tax filings. Of those I know who did get audited, almost all of them were people who simply didn't file tax returns for a few years in a row, and the IRS eventually came knockin'. But among those who file taxes and voluntarily send money to the IRS that they weren't otherwise expecting to receive, they tend to get left alone.



This law could be difficult on tournament players, though. It's much easier for the IRS to claim that one tournament comprises a "session" (though there's a valid argument against that), and casinos keep meticulous records of tournament buyins versus cashes. Sportsbettors could also have an issue for this, especially if a "session" is thought to be a day's slate of games.

We will have to see what happens. It's possible the Big Beautiful Bill won't pass. It's possible this bill will get amendments in the House, and this law could be dropped or modified. It's also possible that the IRS will simply choose not to enforce this.

This isn't good, but it's not going to have the earthshattering impact that many on X are predicting.