Financial push led by Vice President Pence's AAF aims to annul tax breaks for gambling expenditures
In a bold move, former Vice President Mike Pence's think tank, Advancing American Freedom (AAF), has proposed the elimination of all tax deductions for gambling losses for sports bettors in the United States. This proposal, if implemented, would have a significant impact on the tax obligations of both recreational and professional sports bettors.
The AAF's plan, which has been met with criticism from gambling industry leaders and advocates, would eliminate the deduction of gambling losses, even if losses equal or exceed winnings. This means that bettors would owe taxes on their total winnings regardless of their net profit or loss.
Currently, under the federal tax code, gambling losses can be deducted to offset winnings up to certain limits. However, the One Big Beautiful Bill Act (OBBBA) recently capped this deduction at 90%, leading to higher tax burdens for many. The AAF's proposal goes further, calling for a complete removal of this deduction, which would dramatically increase tax obligations for sports bettors.
For example, a bettor who wins $100,000 but loses $100,000 in the same year would still have to pay a federal tax bill on the $100,000 winnings, despite not making a profit. Under the AAF's proposal, a bettor's net taxable income would be $100,000, and the tax owed would be a significant percentage of that amount.
The economic math of AAF's proposal is stark. A bettor who wins and loses the same amount at legal US sportsbooks would still owe a significant federal tax bill. Under the new plan, assuming a 24% rate, a bettor would owe $24,000 in taxes, despite having profited no money.
The AAF argues that gambling is not comparable to business activity and should not receive similar tax treatment. They contend that legal betting funds the growth of government while harming American families. The group also rejects the idea that sports betting tax revenue is a benefit to states, instead framing it as a detriment.
The proposal concludes that many Americans could stop gambling due to the tax consequences, framing that outcome as a policy success. However, the final outcome remains uncertain as legislative discussions continue into late 2025.
Three bills, backed by lawmakers from both parties, aim to reverse the 90% deduction cap on gambling losses, but the AAF's campaign is taking the most aggressive stance yet in the ongoing fight over how sports betting should be taxed.
[1] Source: Advancing American Freedom Policy Memo [2] Source: One Big Beautiful Bill Act (OBBBA) [3] Source: Gambling Industry Leaders and Advocates Criticism [4] Source: Economic Analysis of AAF's Proposal [5] Source: Impact on Recreational and Professional Sports Bettors
- The elimination of gambling loss deductions proposed by Advancing American Freedom (AAF) would require sports bettors to pay taxes on their total winnings, regardless of whether they have a net profit or loss.
- Under the new tax policy, a bettor who wins and loses the same amount at legal US sportsbooks would still have to pay a significant federal tax bill, even if they do not make a profit.
- The AAF argues that gambling is not comparable to business activity and should not receive similar tax treatment, contending that legal betting funds the growth of government while harming American families.
- The proposal suggests that many Americans might stop gambling due to the tax consequences, framing that outcome as a policy success.
- Despite criticism from gambling industry leaders and advocates, the AAF's proposal, if implemented, would have a significant impact on the tax obligations of both recreational and professional sports bettors.
