Who Are the Real Winners and Losers Under
the One Big Beautiful Bill Act’s New Gambling Rules?

Changes in gambling taxes in TY 2026

• Higher W-2G reporting threshold: The reporting threshold for Form W-2 for certain gambling winnings, such as slot machine jackpots, increased from $1,200 to $2,000. This is expected to result in fewer reportable events and fewer W-2Gs issued.
• Gambling losses deductible only up to 90%: This new tax-deduction rule means that gamblers won’t be able to deduct 100% of their losses anymore to offset their winnings. Which means that even if a gambler does not make any money, a portion of their winnings will still be treated as taxable income.
• Recordkeeping is now more important than ever: With fewer tax forms being issued and less reliance on third-party reporting, recordkeeping becomes important. The IRS may start relying more on the gambler’s own records to verify winnings and losses. Casinos and sportsbooks are also expected to do the same when requested.

The Winners

Thanks to the changes to gambling taxation under OBBBA, there are a few winners who will probably have a field day with these new gambling rules.

Casinos and Sportsbooks

The new W-2G reporting threshold would require fewer forms to be issued. This gives the team more time to look into their operations and less paperwork. It also means there will be fewer “jackpot lockups” and a push towards using more automated systems.

However, there is a tradeoff to this win. Since there will be fewer W-2g reporting events, gamblers will start relying more heavily on the casino system-generated player's tax reporting data. The work would then move to maintaining clean reporting systems, instead of issuing forms.

The IRS

The IRS also benefits from the new OBBBA gambling rules, though in a different way. The new rule limiting gambling loss deductions to 90% means that many gamblers who break even over the year will still have taxable income. That increases tax revenue since any gambling and betting activity that previously netted to zero may now generate taxes owed.

Footnote: Raising the W-2G reporting threshold will also reduce third-party reporting for wins in the $1,200–$1,999 range, which can increase underreporting at the margin (fewer taxpayers receive a form prompting reporting), creating some offsetting revenue leakage even as other provisions increase revenue.

The Losers

High-volume gamblers (and many “break-even” bettors)

High volume gamblers will take the biggest hit under this new rule change. With losses capped at 90%, a gambler can owe tax even when they did not actually make money (this is known as “phantom income”)

For example, if a gambler’s total winnings were $100,000 and total losses were $100,000, they can only deduct $90,000 of those losses under the new OBBBA rule. Which means the taxable gambling income would be $10,000. In the past, if a gambler won $100,000 during the year and also lost $100,000, they could deduct the full $100,000 in losses and owe no tax.

Casual gamblers (compliance gets more confusing)

For casual gamblers, their loss is slightly different. Since Form W-2g's reporting threshold has been increased, most casual gamblers would not receive this form. But fewer forms being issued don’t necessarily translate into fewer reporting. Winnings are still taxable by law. But when people do not receive a form reminding them to report their income, some may forget or assume it does not need to be reported. That can lead to underreporting and IRS notices later on.

What to do now

For tax year 2026, reporting on gambling winnings (or losses) will look a bit different then it is right now. So, here’s a quick checklist for both gambling operators and gamblers to keep in mind.

Checklist for Casinos & Sportsbooks

• Update your staff training module. All staff (cage, host, and VIP teams) should have basic knowledge of the new TY 2026 W-2G thresholds and procedures in order to know when a form is required or not.
• Refresh customer communication and make sure they know that a W-2G not being issued does not mean the winnings are not taxable anymore. Clear communication can address any doubts and questions by customers.
• Review year-end controls and reporting systems. Check all the reconcile reportable wins, withholding situations, and customer TIN collection workflows to make sure they are aligned with the updated rules.

Checklist for Taxpayers (Gamblers & Advisors)

• With the new limitation on deductions, even if a taxpayer experiences a loss or did not even break even, it is still going to be taxable.
• Recordkeeping should be non-negotiable. Always keep track of all your gambling sessions, wagers, wins and losses, as well as any supporting documents.
• If you gamble frequently, you need to run the numbers and see how the new deduction rules have an impact on your taxable income.

Where Zenwork fits

The new OBBBA gambling rules are another reminder /that compliance is moving upstream. The real “winners” will be the organizations or taxpayers who prepped before tax season and had clean, classifiable, audit-ready data.

For gaming operators, that means using reporting platforms that automatically flag reportable wins under the new thresholds. When a payout requires tax reporting, the system should collect and validate TINs. It should also have the ability to automatically generate accurate Form W-2G files without manual rework.

For tax advisors, data is important. If a client provides organized data on their wins and losses from an operator, calculating the impact of the 90% deductions becomes easier. The advisor can run the numbers in a spreadsheet and model taxable income quickly.

Zenwork supports both gaming operators and tax advisors by providing a digital tax reporting infrastructure that automates data collection, their validation, tax reporting, and even document storage. Operators can use the platform to manage reporting and generate accurate tax forms, while advisors can receive structured data that is easy to review.