Sportsbooks that operate offshore gain advantage from Trump's single monumental legislation
Starting January 1, 2026, American sports bettors will face a significant change in their tax obligations under the One Big Beautiful Bill Act. The law, set to be signed by President Donald Trump, will limit the deduction of gambling losses to 90% of winnings for federal tax purposes, compared to the previous 100% allowance[1][2][3][4][5].
This change means that a bettor who wins $100,000 and loses $100,000 would only be able to deduct $90,000 of losses, resulting in a taxable income of $10,000 for what was formerly a break-even year[1][2]. The deduction for losses remains limited to the amount of winnings but is capped at 90%, leading to potential "phantom income" where bettors owe tax on amounts they effectively did not profit from[1][3].
Gamblers must itemize deductions to claim losses; if using the standard deduction, they cannot reduce their taxable income by gambling losses[5]. Winnings and losses continue to be reported separately on tax returns, so the limitation applies specifically to loss deductions against winnings[4][5].
The provision was introduced by the Senate Finance Committee and is expected to raise roughly $1.1 billion in federal revenue over 10 years[1][3].
As a result, high-volume bettors are increasingly turning to offshore platforms due to their reporting flexibility and fewer restrictions. Offshore sportsbooks offer a low-friction experience, with crypto-friendly deposits and withdrawals for fast, discreet transactions. Moreover, these platforms do not issue W-2Gs or automatically report winnings to the IRS[6].
Offshore sportsbooks often provide sportsbook bonuses and promos that are more generous than U.S. books. They also offer nationwide access with no restrictions based on the state of residence[7]. For those looking to avoid sports betting taxes on wagers they didn't profit from, offshore sportsbooks may be the smarter choice.
However, it's essential to note that legal online sportsbooks like DraftKings, FanDuel, or Caesars are subject to the new tax law and require meticulous documentation and full compliance from bettors[8]. The change in the law could cost bettors thousands of dollars, even in years when they don't make a profit[9].
In conclusion, the One Big Beautiful Bill Act will significantly affect sports bettors in the U.S. starting in 2026. Betters will only be able to deduct 90% of their losses against their winnings on their federal tax return, potentially leading to increased taxable income and phantom income. Offshore platforms, with their reporting flexibility and generous bonuses, may become a more attractive option for serious bettors under the new tax law.
[1] The Hill [2] Bloomberg Tax [3] Forbes [4] CNN Money [5] IRS Publication 529 [6] OffshoreGaming [7] OffshoreGaming [8] ESPN [9] Action Network
- Starting from January 1, 2026, American sports bettors will face changes in their tax obligations as per the One Big Beautiful Bill Act, limiting the deduction of gambling losses to 90% of winnings for federal tax purposes.
- Under the new tax law, a bettor who wins $100,000 and loses $100,000 would only be able to deduct $90,000 of losses, potentially resulting in a taxable income of $10,000 for what was formerly a break-even year.
- High-volume bettors are turning to offshore platforms due to their reporting flexibility, fewer restrictions, and attractive sportsbook bonuses and promos, offering a low-friction experience with crypto-friendly deposits and withdrawals for fast, discreet transactions.
- Offshore platforms do not issue W-2Gs or automatically report winnings to the IRS, providing nationwide access with no restrictions based on the state of residence.
- Legal online sportsbooks like DraftKings, FanDuel, or Caesars are subject to the new tax law and require meticulous documentation and full compliance from bettors, potentially costing them thousands of dollars, even in years when they don't make a profit.
