Gambling Losses After 2025: The 90% Limit for Sports Bettors and Prediction Markets
A quiet change in the 2025 tax law means gamblers can deduct only 90% of their losses from 2026 on. Here is how it works, who gets hit hardest and how to keep records that protect you.
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📐 Figures verified Sep 28, 2026 against Public Law 119-21 (which changed the wagering-loss rule for tax years after 2025), IRS Topic 419 on gambling income and losses, Form W-2G, Publication 529 and Schedule A. This is general information, not tax advice. How we check numbers →
Starting with 2026, you can deduct only 90% of gambling losses, and still no more than your winnings. So a bettor who wins $50,000 and loses $50,000 now owes tax on $5,000 despite breaking even. You still have to itemize to deduct losses at all, and all winnings are taxable. Sports bettors who churn big volume feel it most.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| Deductible wagering losses, tax years after 2025 | 90% of losses, and no more than winnings | P.L. 119-21 (IRC section 165(d)) | Sep 28, 2026 |
| Gambling winnings | Fully taxable; losses deductible only if you itemize | IRS Topic 419 | Sep 28, 2026 |
| Reporting certain winnings | Casinos and other payers issue Form W-2G | IRS | Sep 28, 2026 |
| Records you need | A log of wins and losses plus receipts, tickets or statements | IRS Publication 529 | Sep 28, 2026 |
| Where losses go | Schedule A, as an itemized deduction | IRS | Sep 28, 2026 |
What Changed in 2026
Before 2026, you could deduct gambling losses up to the amount of your winnings, so a break-even year meant no tax. Public Law 119-21 changed that for tax years beginning after 2025: only 90% of your losses count, still capped at your winnings. Professional gamblers are covered too, with their business expenses counted as losses.
Who Feels It Most
- High-volume sports bettors and poker players, whose wins and losses are both large, so 10% of losses is real money.
- Anyone who breaks even or wins a little: they can now owe tax on money they never kept.
- Non-itemizers: nothing new here, but they still can't deduct losses at all and owe tax on every dollar of winnings.
- Prediction-market traders: how event contracts on regulated exchanges are taxed isn't settled, and the answer may depend on how the platform reports them. Get professional advice.
Recordkeeping That Protects You
Keep a log of each session or bet, with the date, place or app, amounts won and lost, and supporting records such as W-2Gs, betting-app statements, tickets and bank records. Betting apps' annual win-loss statements help, but the IRS expects your own records too.
Worked Example: Three Bettors
- Breaks even: $50,000 won and $50,000 lost. Only $45,000 of losses is deductible, leaving $5,000 taxable, about $1,100 of tax at 22%.
- Loses overall: $20,000 won and $30,000 lost. 90% of losses is $27,000, but deductions stop at winnings, so $20,000 is deductible and nothing is taxable.
- Doesn't itemize: $3,000 won and $4,000 lost. With the standard deduction, no losses are deductible, so all $3,000 is taxable, about $360 at 12%.
Tax uses a single marginal rate for simplicity; your return may differ.
Decision Rules
If this, then that
- If you bet regularly → budget for tax on break-even years starting with 2026.
- If you don't itemize → remember every dollar of winnings is taxable, losses or not.
- If you win big → consider estimated payments; W-2G withholding may not cover it.
- If you trade event contracts → ask a tax professional how your platform's reporting affects you.
- Always → keep a detailed log and your app statements.
Mistakes to avoid
- Assuming a break-even year means no tax.
- Netting wins and losses instead of reporting both.
- Deducting losses without itemizing.
- Relying only on app statements without your own records.
- Ignoring state taxes on winnings.
Related: the SALT cap covers when itemizing pays; 2026 tax changes lists everything new; no tax on tips covers another new rule; and tax planning covers estimated payments.