President Trump’s “Big Beautiful Bill,” signed into law on July 11, 2025, introduces a significant change for gamblers starting next year. The law eliminates tax deductions for gambling losses, meaning gamblers will have to pay taxes on their winnings without being able to offset their losses. This provision has sparked opposition from lawmakers who argue that it could unfairly burden everyday bettors and negatively impact states like New Jersey, where gambling is a crucial industry.
What the New Law Entails
The “Big Beautiful Bill,” which successfully passed through Congress, includes a provision that will take effect in 2026, altering how gambling income is taxed. Under this new law, taxpayers will no longer be able to deduct their gambling losses from their taxable winnings. This change affects all forms of gambling income, requiring individuals to pay taxes on their gross winnings without the benefit of offsetting losses. The implications of this shift are significant, as it reverses the previous tax code allowances that permitted gamblers to reduce their taxable income by deducting losses.
The provision is designed to increase tax revenues by ensuring that all gambling winnings are fully taxed. However, this approach has raised concerns among various stakeholders. Critics argue that the law does not account for the realities of gambling, where losses often exceed winnings for many participants. By treating losses as non-deductible personal expenses, the law could disproportionately impact casual and professional gamblers alike, increasing their overall tax liabilities.
Supporters of the bill argue that the change is necessary to close what they see as a loophole in the tax system that allows gamblers to reduce their taxable income significantly. By taxing gross winnings, the government aims to simplify the tax code and ensure that all income is treated equally, regardless of its source. This perspective is grounded in the belief that the previous deductions for gambling losses were overly generous and contributed to a loss of potential tax revenue. Proponents also suggest that the increased revenue could be used to fund public services and reduce the national deficit, aligning with broader fiscal policy goals.
Lawmakers’ Opposition to the Provision
Lawmakers have expressed strong opposition to the gambling tax change, explicitly stating that it “would be a mistake” due to its potential to unfairly penalize recreational gamblers. The concern is that the law overlooks the nature of gambling, where the majority of participants experience more losses than gains. This perspective is shared by many who believe that the provision could discourage gambling activities by increasing the financial burden on individuals who engage in these activities for leisure or as a profession.
Critics of the law argue that it fails to consider the economic impact on states that rely heavily on gambling as a source of revenue and employment. By removing the ability to deduct losses, the law could deter participation in gambling activities, potentially reducing the income generated by casinos and other gambling establishments. This could have a ripple effect on local economies, particularly in states where gambling is a significant industry.
In addition to concerns about individual gamblers, lawmakers are worried about the broader economic impact on communities that depend on gambling-related tourism and employment. The gambling industry supports thousands of jobs, from casino workers to hospitality staff, and any reduction in gambling activity could lead to job losses and decreased economic activity in these areas. Lawmakers argue that the provision could inadvertently harm local economies, particularly in regions where alternative employment opportunities are limited. This has led to calls for a reconsideration of the law or the introduction of measures to mitigate its potential negative effects on these communities.
Implications for New Jersey
New Jersey, a state where gambling plays a vital role in the economy, could face significant challenges due to the new tax law. The “Big Beautiful Bill,” now law as of July 11, 2025, could negatively impact the state’s gambling sector, which is a key economic driver. The tax change on gambling losses may lead to reduced participation in New Jersey’s casinos and sports betting markets, as players face increased financial burdens without the ability to offset their losses.
The potential decrease in gambling activity could have broader economic implications for New Jersey. The state relies on the revenue generated from gambling to fund various public services and initiatives. A decline in gambling participation could result in lower tax revenues, affecting the state’s budget and its ability to support essential programs. This concern has prompted New Jersey lawmakers to voice their opposition to the provision, highlighting the need to protect the state’s economic interests.
New Jersey’s economy has historically benefited from its robust gambling sector, which includes Atlantic City’s casinos and a thriving sports betting market. The state’s strategic location near major metropolitan areas like New York City and Philadelphia has made it a popular destination for gamblers. However, the new tax law could alter this dynamic by making gambling less attractive to both casual visitors and high-stakes players. This shift could lead to a decrease in tourism, affecting not only casinos but also hotels, restaurants, and other businesses that rely on gambling-related visitors. The potential economic downturn has prompted state officials to explore alternative strategies to sustain the industry, such as promoting non-gambling attractions and events to draw visitors.
Broader Effects on Taxpayers
The implementation of the law in 2026 will force gamblers nationwide to report and pay taxes on their gross winnings without the ability to deduct losses. This shift is expected to raise individual tax liabilities, as gamblers will no longer be able to reduce their taxable income by accounting for their losses. The change reverses prior tax code allowances, affecting both casual and professional gamblers by treating losses as non-deductible personal expenses.
This new tax approach could have significant financial implications for individuals who engage in gambling activities. By increasing the tax burden on gamblers, the law may discourage participation in gambling, potentially impacting the revenue generated by the industry. The broader effects on taxpayers could also extend to other areas of the economy, as reduced gambling activity may lead to decreased spending in related sectors. As the law takes effect, its impact on both individual taxpayers and the gambling industry will be closely monitored.
For more details on the implications of this law, you can read the full article on Moneywise and explore the potential effects on New Jersey at New Jersey Globe.
