The OBBBA Phantom Income Problem

The One Big Beautiful Bill Act (OBBBA) changes how gambling losses are deducted on your federal taxes starting in tax year 2026. Under current law, bettors can deduct all gambling losses up to the amount of their winnings. Under OBBBA, that deduction is capped at 90% of winnings.

The Phantom Income Math

Here is what this means in practice. You bet throughout the year, win dollar-ten-thousand and lose dollar-ten-thousand. You break even. Under current law you owe zero tax on gambling income because your losses cancel your winnings exactly.

Under OBBBA you can only deduct 90% of your ten-thousand in winnings, which equals nine-thousand. That means one-thousand dollars of your winnings are now taxable income. You broke even and you still owe taxes. That is the phantom income problem.

Who Gets Hit

Anyone who receives a W-2G form is exposed. Sportsbooks issue W-2G forms for wins above a certain threshold regardless of your overall net result for the year. The form reports gross winnings, not net profit. OBBBA makes the mismatch between gross winnings and net profit into a tax liability.

What You Can Do

FairBetAct is collecting petition signatures to send to Congress. Every name on the petition signals that bettors vote and that phantom income taxation is a real electoral issue. Sign and share.