The new 90% gambling loss rule tucked into the “Big Beautiful Bill” is already drawing sharp criticism from tax professionals who work with poker players, and the pushback became public on July 17, 2026, when the Internal Revenue Service held a hearing to gather feedback on how the change will be implemented for the 2026 US tax year.
Until now, gamblers who itemized their deductions could write off 100% of their losses against their winnings, meaning a player who won and lost roughly equal amounts across a year owed little or nothing in gambling-related tax. Under the new provision, only 90% of those losses can be deducted, which means a bettor can post a losing or breakeven year overall and still receive a tax bill.
What the 90% Gambling Loss Rule Actually Changes
The mechanics sound like a small tweak, but the effect compounds quickly for anyone who gambles frequently, which describes most serious poker players. Instead of losses simply offsetting winnings dollar for dollar, the tax code will now recognize only 90 cents of every dollar lost as a deduction. The remaining 10% is effectively treated as taxable income even though the player never actually kept that money.
For a recreational player with modest swings, the difference may be a rounding error. For a grinder moving large sums through cash games and tournaments over a year, the gap between what was actually won and what the IRS considers taxable can become substantial.
Kondler & Associates Testifies at the IRS Hearing
Among those who addressed the IRS panel was Gary Kondler of Kondler & Associates, an accounting and tax firm well known within the poker community for representing professional players. According to PokerNews, Kondler used his testimony to argue that the new rule fails to meet the standard of “predictability and consistency” required under Executive Order 13563, which governs how federal regulations are supposed to be designed and reviewed.
Kondler also raised a practical concern about the IRS’s own workload. He suggested the confusion the rule is likely to generate among filers could produce a wave of notices and correspondence that ends up costing the agency more in administrative overhead than it collects in additional tax revenue.
A further point of his testimony focused on the so-called session method, an alternative approach that tracks wins and losses per session rather than lumping an entire year together. Kondler noted that state-level guidance on applying the session method is still thin, and that the definition of a “session” remains unclear, particularly for players under partnership or staking arrangements, which are common in the professional poker world.
The “Phantom Income” Problem Explained
The concept at the center of the debate has been nicknamed “phantom income.” It describes a scenario where a gambler wins a large amount in one session, loses a large amount in another, and ends the year roughly even or even down overall, yet still owes tax because the losses cannot be fully offset against the wins under the new 90% cap.
In practical terms, this means a poker player could have a rough year at the tables, walk away with less money than they started with, and still find themselves writing a check to the IRS. Critics argue this effectively turns a legal recreational or professional activity into one that carries a built-in financial penalty, separate from the ordinary risk of losing at the table.
Why the Session Method Isn’t a Simple Fix
Proponents of the session method have long pointed to it as a fairer way to tax gambling activity, since it measures results closer to how players actually experience their bankroll, session by session rather than as one giant annual ledger. But as Kondler’s testimony highlighted, the approach is only as good as the guidance behind it.
Without clear state-level rules, filers are left guessing at basic questions: how long a session lasts, whether a multi-day tournament counts as one session or several, and how winnings should be allocated among players who share action through staking deals, a routine practice at major events covered in our WSOP guide. Until those definitions are standardized, even players trying to comply in good faith may struggle to calculate their liability correctly.
What This Means for Everyday and Professional Poker Players
For casual players who gamble occasionally, the 90% gambling loss rule may not change much in practice, since their overall winnings and losses tend to be modest. For high-volume recreational players and professionals, the stakes are higher. A pro who books big scores and big losses throughout the year, simply the nature of tournament poker, could see a meaningful gap between real, net income and taxable income under the new formula.
According to PokerNews, everyone who spoke at the July 17 hearing was unified on one point: they asked the IRS to restore the previous 100% loss deduction. The shared concern is that the rule discourages participation in an activity that remains legal, and that the broader gaming industry, including live poker, could see fewer entrants as players factor in the new tax exposure before deciding whether to play.
Poker remains a game that should be enjoyed responsibly. Players are reminded to gamble within their means, treat poker as entertainment rather than a guaranteed income source, and seek support if gambling stops feeling like a choice. Only players aged 18 or older, or the applicable legal age in their jurisdiction, should participate in real-money poker.
None of this coverage should be taken as tax or legal advice. The testimony above reflects positions raised publicly at a federal hearing, and players with questions about how the new rule affects their own filings should consult a qualified tax professional.
FAQ
What is the 90% gambling loss rule?
It is a provision within the “Big Beautiful Bill” that limits gamblers to deducting only 90% of their losses against their winnings for the 2026 US tax year, down from the previous 100% deduction, which can leave players owing tax even in a losing or breakeven year.
Who testified at the July 17 IRS hearing on this rule?
Gary Kondler of Kondler & Associates, a firm known for representing professional poker players, was among those who testified, raising concerns about the rule’s lack of predictability, the administrative burden it could place on the IRS, and unresolved questions around the session method.
How could this rule affect professional poker players?
Professionals who experience large swings between winning and losing sessions could face “phantom income,” meaning they owe tax on amounts that do not reflect their actual net results for the year, which is why testimony at the hearing unanimously called for restoring the 100% loss deduction.
