Will the Taxman Cometh for Horseplayers in 2026?

With a federal deficit of $38 trillion, U.S. lawmakers are investigating ways to create more taxes without raising tax rates on a majority of Americans. One option that's being proposed is specifically targeting gamblers, especially those who try to make their living as professional horse racing and sports betting gamblers.

The proposal in question would limit the percentage of losses that could be used to offset reported gambling income. In the past, gambling winnings could be offset at a rate of $1 to $1 with no credits for losses that exceeded winnings. The new proposal would bring that 100% offset rate to 90%. Effectively, this could result in gamblers losing money during a given year, yet having to pay taxes on a portion of their gross winnings.

At a recent symposium, Tom Rooney, the chief executive officer of the National Thoroughbred Racing Association, expressed his concern that this would have a devastating effect on the nation's horse racing industry. It's noteworthy that Ronney is a former Congressman from Florida, home of a robust horse racing community. He fears that this change could be enough to push professional horseplayers away, all in an effort to create $1 billion in tax revenue. He stated:

“Everybody [in the racing industry] is affected by this, and we are also saying, if you think you are going to make up $1 billion from that tax, you are not going to get that, and you are probably going to lose everything.”

About the Current Bill

The current bill, which is circulating in Congress, is sponsored by Kentucky Rep. Andy Barr. Kentucky is home to one of the most robust horse racing communities in the nation. At this time, it's not clear if this bill will get attached to other legislation or be presented as a stand-alone bill.

To date, there seems to be no opposition to this bill. With bipartisan support, the bill would certainly get past both the House of Representatives and the Senate before being signed into law by President Donald Trump. Entering 2026, it's assumed that the bill will continue gaining support until passage in the early part of 2026. It's hard to predict what will happen in Washington during an off-election year. Regarding this ambiguity, Rooney stated:

"One of the reasons I’m no longer in Congress is because I got very frustrated that things that should have gotten done did not get done.”

Another fear is that this bill could pass early next year, retroactive to 2025. That could put a lot of professional gamblers in jeopardy if they were counting on big losses to offset big winnings.

This is just one of the financial issues that have been plaguing the U.S. horse racing industry. The industry has also been facing issues related to loss of customer patronage, short fields, and the current H-2B visa system, which directly affects the population of much-needed backstretch workers. Indeed, there is cause for concern in an industry that needs help getting things right now.