DraftKings CEO Jason Robins spoke against a new tax policy in President Donald Trump’s proposed One Big Beautiful Bill Act (OBBBA). The measure would limit gamblers to deducting only 90% of their losses from winnings, a shift from the long-standing standard of full deductions. This means that even players who broke even on the year would still face tax charges.
Speaking with Jim Cramer on CNBC’s Mad Money, Robins said that the tax provision “doesn’t make sense,” asking how someone can “pay income tax on something that’s not actually income.”
What Robins is confused about can be explained with this scenario:
A bettor could place $1,000 in wagers in one year, racking up $1,000 in losses, and thus, breaking even on the year. Despite zero profit, this user would only be able to deduct $900 (90%) of the $1,000, which means they would be taxed on the remaining $100.
Robins went on to say DraftKings is working with lawmakers to get rid of this provision, and there is some support for change. However, other organizations have favored the new tax rate, including one founded by a prominent politician.
The Advancing American Freedom (AAF), founded by former U.S. Vice President Mike Pence, is a group that rejected the movement to restore previous sports betting tax rates in an August 4th memo posted on X (formerly Twitter).
As an organization that advocates for implementing Conservative values within policy proposals, the AAF argues that the new rate would deter Americans from engaging in sports betting. Their position is that sports betting is an unproductive activity without real economic output.
The memo stated that “sports betting leads to bankruptcy rates increasing by 20-30% in the years following legalization.” Such a statement was met with criticism online, with comments stating that taxing unrealized income is an unfair process.
It remains to be seen what will be done with this new tax rate on sports bettors. However, with a leading operator like DraftKings leading the charge, coupled with the public outrage towards this provision, a favorable result for sports bettors appears to be the more likely outcome.
The issue is likely to be resolved in late 2025 or sometime next year during budget reconciliation.
