New Federal Tax Rule Limits Gambling Loss Deductions to 90 Percent

A new federal tax rule limits the amount gamblers can deduct from their winnings. Under the change, players may offset only 90 percent of losses against taxable winnings, down from the previous 100 percent limit. It applies to all forms of gambling and took effect at the start of this year.

Professional poker players have begun reducing the number of high-stakes tournaments they enter. One player with more than $48 million in career winnings said the new limit makes large buy-in events less viable. The player stated he is avoiding tournaments with $10,000 or higher entry fees and traveling less than in prior years.

He previously entered between 130 and 150 tournaments annually and recorded more than $2.8 million in winnings last year.

Tax professionals note that the change affects players who compete in many events even when net profit is small. A player with $100,000 in winnings and $110,000 in losses could owe taxes on $10,000 under the new rules despite finishing the year behind.

An enrolled agent who works with professional poker players said several clients have already reconsidered full-time participation. The agent recommended that players recalculate prior years under the updated deduction limits to understand the impact.