Trump Considers Ending Federal Taxes on Gambling Winnings

Trump Signals Openness to Ending Federal Taxes on Gambling Winnings — Why It Matters Beyond the U.S.

President Donald Trump has indicated he is open to considering the elimination of federal taxes on gambling winnings. Speaking briefly to reporters during an Air Force One gaggle, he said he would “have to think about” removing the federal levy applied to gambling payouts, framing it within a broader tax-cut agenda.

Under existing U.S. tax rules, gambling winnings are generally treated as taxable income, and reporting/withholding requirements can apply depending on the payout type and size. A major controversy in the U.S. right now is not only the tax on winnings itself, but a new limitation on how gambling losses can be deducted against winnings—creating “phantom income” scenarios where a high-volume bettor could owe tax even if they break even.

The “90% loss deduction” issue driving the debate

The discussion has intensified after the One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, introduced a cap limiting deductible gambling losses to 90% (effective for tax years beginning after December 31, 2025). The practical impact: even if a gambler’s wins and losses net to zero, they may still show taxable income under the cap.

Legislative efforts to change the rule

Following the backlash, lawmakers have floated proposals intended to restore the traditional 100% loss-offset treatment. Reporting around these efforts highlights that representatives from gambling-heavy states (notably Nevada) have been particularly active, reflecting the political sensitivity of gambling taxation in regions where the industry is a major employer.

So why should readers in India care?

Because tax policy shapes gambling behaviour everywhere. The U.S. debate is a live example of how changes to withholding, deductions, and the definition of “net winnings” can shift players toward (or away from) regulated channels—and can also affect cross-border platforms, affiliates, and the wider gaming ecosystem.

In India, the tax baseline is already strict. Winnings from gambling/lotteries and many gaming formats are commonly associated with a 30% tax rate, and India has specific TDS (tax deducted at source) mechanisms for winnings—especially for online gaming, where dedicated provisions like sections 115BBJ and 194BA were introduced to tax and withhold on net winnings.

And for those looking for a legal, land-based casino reference point in India: casino gaming is permitted in limited jurisdictions (such as Goa under local rules). A well-known example is Deltin Royale (Goa).

Bottom line

Trump’s comment about potentially eliminating federal taxes on gambling winnings is politically potent, but any real change would require Congressional action and would likely be debated alongside the already-controversial 90% loss-deduction cap. For Indian readers, the bigger takeaway is structural: when governments change how winnings and losses are taxed, the incentives shift fast—and so does where (and how) people choose to gamble.