New York Lawmakers Considering Bill to Disallow All Gambling Loss Tax Deductions

• A bill introduced in May will disallow gamblers to deduct any gambling losses on their taxes
• Sen. Andrew Gounardes’s (D-26) bill, SB 7876, received a favorable report from the budget and revenue committee
• The bill currently resides in the Senate Finance Committee

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Last week, gamblers saw the federal government agree to a bill to reduce their potential gambling loss tax deductions by 10% with the passage of President Donald Trump’s (R) One Big Beautiful Bill Act.

In New York, gamblers could be hit with a double blow as lawmakers are considering legislation to disallow any gambling loss deductions in state tax returns.

Sen. Andrew Gounardes (D-26) introduced SB 7876 in May, an act to amend New York’s tax law to reduce the allowable itemized deductions for gambling losses to 0%. The state currently allows professional gamblers to deduct any and all losses as long as they do not eclipse a gambler’s winnings for the year.

While the New York 2025 legislative session concluded on June 18, all bills that were not passed still remain live and are automatically introduced in the second year of the session. The next session will begin in January 2026.

No Longer Subsidize Gambling Losses

The bill, currently sitting in the Senate Finance Committee, moved forward with a 5-2 vote from members of the Senate Budget and Revenue Committee on May 28. According to the legislation, by disallowing itemized deductions of gambling losses New York could see an additional $50 million in revenue a year.

According to the bill, in 2015, 68,000 taxpayers deducted $900 million in qualified losses from their New York returns.

“I don’t think we should be subsidizing people who are gambling and incentivize them to gamble more, to cover their losses for them. That was the intent of this bill,” Gounardes said during a late May public hearing of the bill.

Most states with legalized gambling do allow their residents to itemize deductions for gambling losses. However, according to the introduced legislation, the following states do not:

• Connecticut
• Illinois
• Indiana
• Kansas
• Massachusetts
• Michigan
• North Carolina
• Ohio
• Rhode Island
• West Virginia
• Wisconsin

It seems though that this is not particularly accurate. According to a study published in the Journal of Financial Planning, as of February 2025 only nine states completely disallow professional gamblers to itemize deductions for gambling losses. The states are as follows:

• Connecticut
• Illinois
• Indiana
• Kansas
• Louisiana
• North Carolina
• Ohio
• Rhode Island
• Vermont

Maine itemized deductions are subject to income phaseouts and Massachusetts itemized deductions are only allowed from licensed state operators, according to the study.

The bill will be automatically introduced with its same number at the start of the 2026 session in January. However, it is being reported that Gov. Kathy Hochul (D) may call a special session this fall to discuss the New York budget, where the bill could also be considered again.

Confusion Over Federal Deduction Policy

During the public hearing of SB 7876, the committee members did express some confusion over whether the federal government allows gamblers to deduct losses on their tax returns.

Gounardes inaccurately reported during the hearing that the Trump approved Tax Cuts and Jobs Act of 2017 (TCJA) disallows gamblers to deduct losses on their federal tax returns. The bill, he said, will bring New York more in line with the federal tax code.

“The thing is, their biggest tax liability is obviously their federal tax liability and they currently don’t get this benefit under the federal tax code and so we actually think the impact on the individual taxpayers here won’t be as significant as the impact that they faced by the TCJA that was signed by President Trump in 2017,” he said.

A member of the committee corrected Gounardes prior to the vote on the legislation, showing the Senator a copy of the federal tax code that declares gamblers are allowed to deduct their losses. The legislator noted “we’ll look at that” if the bill moved forward to another committee.

Ironically, Gounardes’ statement would at least become partially true less than two months later, as Trump’s One Big Beautiful Bill Act includes a tweak to the tax code to only allow gamblers to deduct 90% of their losses on their federal returns.

Congresswoman Hoping for Federal Reversal

Rep. Dina Titus (D-Nevada) yesterday introduced HR 4303, the FAIR BET Act, which restores the allowance for a professional gambler to deduct 100% of their gambling losses. On her social media channels, Titus declared “no one should have to pay taxes on money they didn’t win.”

The legislation received bipartisan support, as Rep. Troy E. Nehls (R-Texas) signed onto the bill.

Under the Big Beautiful Bill, if a professional gambler wins $1,000,000 in a single year, but also loses $1,000,000, they will only be able to deduct $900,000 in losses from their taxes.

This means they will have to pay taxes on the $100,000 they cannot deduct, as if they had won the money.

“It pushes people into the black market if they don’t do regulated gaming because they have a tax disadvantage. The black market doesn’t pay taxes, it isn’t regulated, doesn’t help with problem gaming. It’s bad for the industry and it’s bad for the player,” Titus said during an appearance on News Nation.