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- New federal law raises gambling taxes from 0.25% to 5%, hitting poker players hardest
- Professional bettors face higher tax burdens on winnings starting 2025
- Industry groups demand repeal, calling measure “devastating” for livelihoods
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Essential Context
The “One Big Beautiful Bill” signed into law July 4, 2025, includes a controversial provision raising federal excise taxes on legal gambling from 0.25% to 5%. This change disproportionately impacts professional poker players who rely on consistent winnings to sustain their careers.
Core Players
- Donald Trump – President Trump who signed the bill into law
- Professional Poker Players Alliance – Leading opposition group
- Congressional Budget Office – Projected $5 trillion revenue loss from broader tax cuts
Key Numbers
- 5% – New federal excise tax rate on legal gambling
- 0.25% – Previous tax rate (1982-2024)
- $5 trillion – Projected 10-year revenue loss from broader tax cuts
- 1.2% – Projected GDP growth from tax plan
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The Catalyst
“This tax hike could wipe out entire careers,” said a professional poker player who requested anonymity. “We’re not just talking about recreational gamblers – this directly targets people who make their living through skill-based betting.”
The provision emerged as part of a broader $5 trillion tax cut package aimed at extending 2017 TCJA provisions. Lawmakers sought offsets to partially fund these cuts, with gambling taxes becoming a target.
Inside Forces
The tax increase represents a 20-fold jump from previous rates, creating new financial pressures for professional bettors. Unlike casual gamblers, these individuals report winnings as taxable income and face higher audit risks.
Industry advocates argue the change fails to distinguish between recreational gambling and professional betting, treating both equally under tax law.
Power Dynamics
President Trump’s administration pushed the bill through Congress with minimal debate, leveraging reconciliation rules to bypass filibusters. Poker players now face an uphill battle to reverse the measure through legislative channels.
Opposition efforts focus on highlighting the tax’s disproportionate impact on small business owners (many poker players operate as independent contractors) and the potential chilling effect on legal gambling markets.
Outside Impact
Economic analysts warn the tax could drive professional betting underground, reducing transparency and tax compliance. Legal online poker platforms may see reduced participation as players seek lower-tax alternatives.
Supporters counter that the increased revenue helps offset broader tax cuts, though the CBO estimates only 19% of the $5 trillion revenue loss would be offset by economic growth.
Future Forces
Poker advocacy groups plan to:
- Lobby for carve-outs in future tax legislation
- Challenge the tax’s constitutionality in court
- Educate lawmakers about professional betting distinctions
Data Points
- July 4, 2025: OBBB signed into law
- 1982: Last gambling tax rate reduction (2% → 0.25%)
- $4 trillion: Dynamic score of tax plan’s revenue impact
- 1.2%: Projected long-term GDP growth from tax cuts
The gambling tax increase represents a significant policy shift that could reshape professional betting landscapes. While lawmakers framed it as a necessary revenue measure, opponents argue it unfairly penalizes skilled players who already face volatile income streams.
