A bill proposed in May aims to prevent gamblers from deducting gambling losses on their taxes. Introduced by Sen. Andrew Gounardes (D-26), SB 7876 passed the budget and revenue committee and is currently in the Senate Finance Committee. Recently, gamblers faced a federal reduction in gambling loss tax deductions by 10% due to President Donald Trump’s One Big Beautiful Bill Act. In New York, there’s potential legislation to prohibit any gambling loss deductions on state tax returns. Gounardes introduced SB 7876 to amend New York’s tax law, reducing the allowable deduction for gambling losses to 0%. Currently, professional gamblers can deduct losses if they don’t exceed their winnings. Although the 2025 legislative session ended on June 18, pending bills remain active and will reappear in the next session starting January 2026.
The bill moved forward with a 5-2 vote in the Senate Budget and Revenue Committee and could generate $50 million annually for New York by eliminating gambling loss deductions. In 2015, 68,000 taxpayers deducted $900 million in losses on New York returns. Gounardes stated the bill aims to stop subsidizing gambling, preventing gamers from being incentivized. Most states with legal gambling allow such deductions, but some, including Connecticut and Illinois, do not. The bill is set to be reintroduced in the 2026 session, but Gov. Kathy Hochul may call a special session to discuss the budget and possibly the bill.
During the hearing, confusion arose about federal policies on gambling loss deductions. Gounardes incorrectly stated that the TCJA of 2017 prohibits such federal deductions, aligning New York more closely with federal law. A committee member corrected him, indicating federal law allows these deductions. However, Trump’s recent bill changes this by limiting deductions to 90%. Rep. Dina Titus (D-Nevada) introduced HR 4303, the FAIR BET Act, to restore full deduction rights for professional gamblers. Titus argues no one should pay taxes on unearned money, gaining bipartisan support. Under the current federal law, if a professional gambler wins and loses $1,000,000 in a year, they can only deduct $900,000, being taxed on the remaining $100,000. Titus warns this could drive people to unregulated gambling markets, detrimental to the industry and players.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com