Big Beautiful Bill Changes Tax Deductions for Crypto Casino Industry

The tax year beginning in 2026 has a new loss deduction limit prevailing for players at crypto casinos. To begin, the OBBBA was enacted in July of 2025 by President Donald Trump. This has primarily changed federal tax laws and thresholds for gamblers and casinos permanently.

Limit of Loss Tax Deduction

Previously, gamblers were able to deduct 100% of their losses against their winnings. This meant as long as the gambler provided an itemized list of their deductions and the losses did not exceed their winnings, they could deduct their losses completely from being taxed.

As of 2026, this has changed so that instead of breaking even, gamblers can now only deduct 90% of their losses. The OBBBA capped the loss deduction, which in turn creates a “phantom income” that can be taxed from the remaining 10%.

For example, let’s say a player wins $200,000 and in that same year they lose $200,000 total; previously they could break even and deduct their losses to break even, but with the new law they are only able to deduct $180,000. This in turn leaves $20,000 remaining as taxable income that the gambler does not actually net.

How This Affects the Casinos

This not only affects the gamblers but also the casinos themselves. Since the players cannot technically break even with this new law, it has the potential for reducing traffic to the crypto casinos. Professional or even casual players may curb their play volume due to the new changes.

Another main reason this affects the casinos is that since the deductions are harder to claim, players can become less incentivized to partake in casino incentives such as reward/point programs. This can then, in turn, complicate the casinos’ efforts for AML compliance, since they use the rewards systems to track players.

Casinos may see lower revenue due to gamblers owing tax on the phantom income and having less disposable income to play with. This applies even to professional gamblers. The bill is also in need of some clarity as to the fact that it increases particular IRS tax reporting thresholds for gamblers, which can reduce some burdens for casinos paperwork-wise.

Overall, gamblers and casinos alike have been pushing to get rid of, completely, or adjust the 90% limitation due to the negative effects on both parties. Some bills are being pushed out to restore the previous law of 100%, but as of now, the change will remain.

Reporting Income Thresholds

There has been some confusion with the change the OBBB brings regarding the general income reporting threshold. The new law states the threshold changed from $600 to now $2,000. This has confused the gambling industry, since they are unsure if it applies only to the 1099-MISC prizes or if it also applies to the W-2G slot jackpots.

Slot jackpots use a W-2G that is reported to the IRS, and for around the past 50 years the limit was to be reported if the winnings were $1,200 or more. The industry overall has been working together to get that raised for years to $5,000, but since the new threshold, they are considering the $2,000 limit to be a middle ground for now.

The confusion stems from the fact that Section 70433 of the OBBB is modifying IRC Section 6041(a) by raising the threshold from $600 to $2,000. The AGA believes this modification is set for the slot jackpot threshold, since they believe it is linked to Section 6041. Other tax professionals believe the W-2G is not linked to that section but to IRC Section 3402(q), which the OBBBA does not change.

For players, be cautious and aware of any changes that may come in the future.As for casinos, it is vital to make sure your policies are in line with these changes and to keep players informed.