- Sports bettors could owe taxes on their winnings without any loss deductions under the proposal from Advancing American Freedom.
INDIANAPOLIS – Former Vice President Mike Pence’s think tank, Advancing American Freedom (AAF), is urging Congress to eliminate tax deductions for gambling losses entirely. This move would dramatically increase tax burdens for legal sports betting residents across the country.
In a new policy memo, AAF called on lawmakers to reject three bipartisan bills that would restore the full 100% deduction for gambling losses. Congress recently capped the deduction at 90% as part of the One Big Beautiful Bill Act (OBBBA), triggering a tax hike on recreational gamblers.
But AAF wants to go further. “Gambling losses should not be deductible at all,” the group wrote, arguing the current tax code “encourages gambling” and “rewards unproductive behavior.”
The economic math of AAF’s proposal is stark. A bettor who wins $100,000 and loses $100,000 at legal US sportsbooks in the same year would still owe a $24,000 federal tax bill under the new plan. This is despite having profited no money.
What AAF’s Plan Would Mean for Bettors
| Scenario | Old Law (100% Deduction) |
OBBBA Law (90% Cap) |
AAF Proposal (0% Deduction) |
|---|---|---|---|
| Winnings | $100,000 | $100,000 | $100,000 |
| Losses: ($100,000) | $100,000 deducted | $90,000 deducted | $0 deducted |
| Net Taxable Income | $0 | $10,000 | $100,000 |
| Tax Owed (24% rate) | $0 | $2,400 | $24,000 |
“RESULT: Many Americans could stop gambling due to the tax consequences,” the memo concludes, framing that outcome as a policy success.
The plan would punish bettors for breaking even, but AAF maintains that gambling is not comparable to business activity and should not receive similar tax treatment.
The group also rejects the idea that sports betting tax revenue, which has totaled over $9 billion nationwide since 2018, is a benefit to states. Instead, AAF argues that legal betting “funds the growth of government while harming American families.”
Further Reading: NY Sportsbooks Post Record 2024 Numbers, But Who’s Really Winning?
Three bills, backed by lawmakers from both parties, aim to reverse the 90% deduction cap. With another fight in how sports betting should be taxed, AAF’s campaign is taking the most aggressive stance yet.
