DO I OWE TAXES IF I BROKE EVEN GAMBLING?

THE RULE THAT CHANGED

Under prior law, gambling losses were deductible up to 100% of your winnings — so a bettor who won $100,000 and lost $100,000 over the year had zero net taxable gambling income. Starting tax year 2026, under the One Big Beautiful Bill Act (OBBBA), that changes: gambling losses are only deductible up to 90% of your gross losses, still capped at your total winnings.

That 10-percentage-point gap doesn't disappear — it becomes taxable income, even though you didn't actually come out ahead for the year. This is what's often called phantom income: income that exists purely because of how the deduction is now calculated, not because of any real economic win.

THE MATH, WORKED OUT

Take a bettor who won $100,000 and lost $100,000 across the year — a true break-even:

Under prior law this same bettor owed $0 in gambling income tax. Under the new rule, they owe tax on $10,000 of income they never actually won — money that came entirely from the 10% haircut on their deduction, not from any real profit.

WHEN PHANTOM INCOME DOESN'T APPLY

The 90% cap only bites when your losses are large relative to your winnings — specifically, when the old-law deduction (capped at winnings) is bigger than the new 90%-of-losses figure. If you're a net winner with losses well below your winnings, the cap on losses (not the 90% haircut) is usually already the binding constraint, and the new rule doesn't change your taxable income at all. Phantom income shows up specifically in break-even and near-break-even situations — which is exactly why high-volume bettors and poker players who reinvest most of what they win are the ones who need to watch this closely.

WHY THIS HITS HIGH-VOLUME PLAYERS HARDEST

A casual bettor with one or two small wins a year barely notices this rule. Someone running action across five, ten, or fifteen sportsbooks — reinvesting winnings, chasing +EV lines, grinding out a poker bankroll — can have gross winnings and gross losses that are both large and close together, which is exactly the scenario where the 90% cap creates the most phantom income relative to actual profit. The more books and the higher the volume, the more this matters, and the more it matters that every win and loss across every book is reconciled correctly instead of estimated.

WHAT TO DO ABOUT IT

You can't undo the 90% cap — it's the law starting TY2026. What you can control is knowing your real number before your return is due, and making sure every sportsbook, casino, and poker site you played at is actually accounted for, since an incomplete picture of your winnings or losses distorts the phantom-income math in either direction.

LedgerWager reconciles every win/loss statement, W-2G, and 1099 you upload into one workpaper and calculates this exactly — not estimated — so you (and your CPA) know the real taxable income and phantom income figure before you file.