Andrew here. This morning we’re taking a look at an overlooked provision of President Trump’s domestic policy law that could have huge consequences for the gambling industry. Ian Frisch digs into how a change in the tax code could make it much harder to win. And with Prime Day just wrapping up, Danielle Kaye examines pricing strategy in an age of tariffs. We also have a quiz question about “Superman” that will test your knowledge of both the box office and inflation math.
It’s President Trump’s casino — and the house always wins.
That is the crux of gamblers’ frustration after they read Trump’s landmark policy legislation, which includes an under-the-radar provision that amends how gambling income is taxed.
Previously, gamblers were taxed like any other profession: If a poker player or sports bettor broke even, he or she would report zero taxable income. But starting next year, only 90 percent of losses will be deductible.
When gamblers break even, or incur a net loss, they will still owe taxes — effectively a 10 percent penalty on gambling winnings. The change is expected to generate an additional $1.1 billion in tax revenue through 2034.
“It makes it impossible to gamble for a living,” said Phil Galfond, a professional poker player.
Almost immediately after the law’s contents became public, professional gamblers, gaming coalitions, lawmakers and members of the casino industry denounced the betting-related change, vowing to roll back the rule before it goes into effect.
The backlash has set up a battle over earnings from the hundreds of billions of dollars that Americans legally wager each year through casinos, racetracks and sports betting apps.
A new congressional bill aims to overturn the rule. On Monday, Representative Dina Titus, a Nevada Democrat and co-chair of the Congressional Gaming Caucus, introduced the Fair Accounting for Income Realized From Betting Earnings Taxation Act, or FAIR BET Act, which would restore the 100 percent deduction for gambling losses.
“It’s taxing people on money that they don’t have,” Titus told DealBook, “and unfairly targeting one industry that should be treated like any other.”
Co-sponsored by a fellow Democrat, Representative Ro Khanna of California, the legislation immediately received bipartisan support, with Representative Troy Nehls, Republican of Texas, signing on.
Poker players fear accounting nightmares. Under the new rules, professional gamblers will not only pay more taxes and take home less net income but see these effects compound as they win and lose more money.
For example: If a player wins $100,000 and loses $100,000 in a given year — breaking even, with zero net income — the player would owe taxes on $10,000 in “earnings,” essentially phantom income. But if a player wins $1 million and loses $1 million — again, breaking even — the player would owe taxes on $100,000.
For professional poker players who regularly have winning and losing streaks well into the millions of dollars, this type of penalty for high-stakes play can spell ruin.
Similarly, if a player claims a net loss at the end of the year, he or she will still owe taxes. For example: If a player wins $300,000 in the first half of the year but then goes on a losing streak and counts $315,000 in losses — ending the year with a net loss of $15,000 — the player will owe taxes on $16,500 because the deduction would be capped at 90 percent of the losses, or $283,500.
Lobbyists for the gambling industry are in an awkward position. In May, the American Gaming Association, the lobbying arm of the casino and gambling industry, defended the current scheme for taxing gambling income in a letter to the House Committee on Ways and Means. “This longstanding itemized deduction for gaming losses is not a subsidy for gaming customers,” the association wrote. “It is a tool for properly measuring income.”
Despite these tax-related preferences, the group supported Trump’s bill, saying in a July 3 statement that the act significantly enhances the gambling industry’s “ability to sustain quality jobs and deliver economic benefits.”
Now the American Gaming Association is backing the FAIR BET Act, which criticizes the bill it just endorsed.
The tax-code change could have a profound effect. While the industry benefits from some of Trump’s new economic policies, it may see a reduction in the amount of money that professional and amateur gamblers play with at commercial outlets, such as casinos, which in 2024 posted a record $72 billion in revenue.
“It will be tens of billions of dollars,” said Derek Stevens, the owner and C.E.O. of Circa Sports, a sports betting chain and app. “It’s definitely going to impact jobs, hotel occupancy, visitation and other elements of casino games,” he added.
Some industry executives also believe the changes will push professional gamblers away from aboveground commercial establishments and into unregulated and illegal betting markets where they can avoid the financial penalty associated with reporting their income.
“It doesn’t take all that much, frankly, to have $20 million a year in winnings and to have $19.8 million in losses,” Stevens said. “All of that liquidity is going to be moving offshore, or moving to illegal books. I just don’t think people fully digest the impact.”
IN CASE YOU MISSED IT
Trump makes a barrage of tariff threats. President Trump sent out almost two dozen letters this week notifying countries that they would be subject to high tariffs, pushing the date they go into effect to Aug. 1. The frequent changes in Trump’s tariff policies — sometimes leading to sudden trade wars — have left global leaders wondering what he will do next and seeking friendlier trading partners.
Trump keeps pressure on the Fed. The president has continued to publicly lobby for the Federal Reserve to lower rates, though its key policymakers remain divided. Jay Powell’s term as chair doesn’t end until May, but some in Trump’s circle are already auditioning to replace him, leading to concerns over whether the next chair can stay independent.
Linda Yaccarino says she’s exiting X. The chief executive didn’t name a reason for her departure. Whoever is named as her replacement will be tasked with making X profitable again and working with its owner, Elon Musk, who has at times been openly hostile toward advertisers and is under fire from Tesla investors over worries that he has been distracted by politics.
Ferrero agreed to buy WK Kellogg for $3.1 billion. The maker of Tic Tacs and Nutella spreads has made a series of acquisitions in recent years aimed at expanding its business in North America.
The retail strategist who helps hack Prime Day
Prime Day is no longer just a day, and it’s no longer just about Amazon Prime: A wide range of retailers offer deep discounts during the period. This year, shifting tariff policies made it trickier for those stores to decide how and what to discount.
Matt Pavich, the senior director of strategy and innovation at Revionics, a retail price-optimization company, helped with the calculus.
DealBook’s Danielle Kaye talked with Pavich about companies’ decisions behind the scenes. The conversation has been edited and condensed.
How are retailers thinking about Prime Day and competing discount events?
With the threat of tariffs, you want to maybe have a little extra stock of the products that you’re promoting on Prime Day, because even if you don’t sell it all, you will still have that stock at a lower cost than having to re-buy another shipment that now is 30, 40, 25, whatever percent more expensive.
And then, if you know you’re going to shift away from imported goods into more domestic goods, or from one brand into another brand, as a result of tariffs, the really savvy retailers were already thinking about how to get consumers to start trying these goods. Prime Day, back to school — that’s going to hit right before a lot of the tariff crush settles in. It’s a good chance to get consumers ready to buy that product.
How are retailers preparing customers for the possibility of higher prices?
Consumer sentiment is so tied to tariffs. Retailers know this, and so they’re communicating this upfront. It could be as simple as the tags you put in the store that say this is a tariff product. It could be the opposite, which is shining the spotlight on domestically made things.
Now is the time retailers need to focus on price perception, really need the focus on having the best prices on the products consumers care most about. And that could be via promo.
You’re going to see more consumers shift into discounters, mass merchants, bulk — away from higher-price retailers.
As Prime Day has evolved into a multiday affair, what kind of pressure is there on other retailers to have their own discount events, too?
If you’re a mass merchant, or you directly compete with Walmart and Amazon, you want to compete because this is a period where they’re going to steal share from you.
You have to think: How are my consumers different? Because it’s hard for a lot of retailers to have the same cost structure as, say, a Walmart, which has some inherent structural advantages. You really have to choose very wisely.
What the smaller retailers have, though, depending on what segment they’re in and what they’re specifically selling, is they’re truly the experts for their region or for their specific product.
So that will always give them an edge.
Quiz: Will ‘Superman’ soar?
There’s a lot riding on “Superman” — more than just the fate of the world.
The reboot, which hit theaters on Friday, kicks off Warner Bros. Discovery’s high-risk plan to relaunch the DC library of comic book characters, which have been widely viewed as underutilized compared with Disney’s blockbuster-driving Marvel characters.
The film is expected to bring in between $130 million and $140 million during its opening weekend.
Superman, the story, has broken new ground in Hollywood before. Though The New York Times’s review of the 1978 version, starring Christopher Reeve, hinted at low box-office expectations (“it’s a movie whose limited appeal is baked in,” the critic wrote), the film turned out to be a huge commercial success — the first big superhero movie.
In inflation-adjusted dollars, how much did “Superman” gross at the box office during its opening weekend in 1978?
A. $35 million
B. $102 million
C. $337 million
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Quiz answer: A
The post Break Even at the Casino? You May Still Owe Taxes. appeared first on New York Times.
