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State of Play
- The US online casino industry is undergoing significant changes to tax laws, affecting both players and operators.
- Recent federal adjustments and state-level tax hikes signal a shift toward increased revenue extraction from gambling activities nationwide.
- These developments will directly influence the financial outcomes of online gamblers and casino businesses across multiple states.
A landmark change took effect with the passage of President Donald Trump’s One Big Beautiful Bill, signed in July 2025, which modified the federal tax treatment of gambling earnings.
Starting Jan. 1, gamblers can only deduct 90% of their losses against winnings for tax purposes, down from the previous 100%. This means that players who break even over a year, for example, winning and losing $10,000 each, will now owe taxes on the net $1,000.
This federal change marks a notable increase in tax burden for players at real-money online casinos nationwide. How this impacts players and the time they play, time will tell. However, this will have an impact on the industry and those who participate in online casinos and online sportsbooks.
States looking to capitalize on industry growth
State governments are also raising taxes on online operators as a result.
New Jersey online casinos, a pioneer in online gambling regulation and the first state to introduce real-money casinos in the US, increased its gross gaming revenue (GGR) tax rate to 19.75% from 15% in July 2025.
Michigan online casinos are facing a bill (SB 1194) that would escalate tax rates incrementally based on operator revenue, raising rates from 22% for lower tiers up to 29% for GGR above $12 million.
These measures indicate that states view the booming iGaming market as a lucrative source for tax revenue, potentially impacting operator profitability and market dynamics for American gamblers.
Additional states may follow New Jersey and Michigan by increasing taxes to capitalize on market growth. Keep an eye on Pennsylvania and what the commonwealth does there. The other interesting aspect to watch is sports betting. New York already has a massive tax; if it makes any adjustments in this area, it will be incredibly interesting.
Based on reporting by Giovanni Shorter for MLive.
