Note: This article is for informational purposes only and should not be considered legal or tax advice. Individual circumstances vary, and readers should consult a qualified tax professional for guidance.
On Episode 492 of the Thinking Poker Podcast , Andrew Brokos and co-host Carlos Welch brought on Russell “Russ” Fox (Twitter/X: @russcfox ), author of the Taxable Talk Blog and one of the foremost experts on tax law as it related to poker and gambling. Railbird Creations listened to this great episode for you to cover the highlights, including but not limited to:
– A “Session” is currently undefined and must be “reasonable”
– Sports Bettors Likely Cannot Lump Together Sports Bets
– Professionals Can Only Deduct 90% of Expenses
– You may be able to deduct sweepstake coin buy-in as losses using a Form 8275
– The new law impacts everyone in the gambling eco-system
While this article offers a good summary of the most important points covered during this episode, you should still listen to get the full scoop for yourself.1 Also, don’t forget to spread the good word about this episode to promote and support the show’s good work and to thank Russ Fox for his time.
What Constitutes a “Session”
How a “session” is defined directly affects how wins and losses are calculated for tax purposes. Because gambling taxes are assessed at the “session” level, unclear definitions create real risk for players, especially professionals.
1. “Session” is Currently Undefined
Because the tax code does not define “session,” courts rely on common-sense interpretations. This creates uncertainty and makes good recordkeeping critical.
Russ Fox: “There’s various court decisions on this, but ‘session’ is not defined in the tax code anywhere.”
He explained that, “[W]hen something isn’t defined, you have to look at a dictionary definition.” Plain sense common meaning, therefore, suggests that “session” should be defined as “something with a discrete beginning and an end.”
Russ provided the following example: “[I]f I walk into a casino play poker, stop playing poker, and go home, I come in with, say, $500 and leave with $1200, [then] I’ve won $700.” The same applies if “you’re playing slot machines or whatever you’re doing in a casino.”
Does that mean that “Session” could differ depending on where you play? Russ Fox theorizes that the answer to that is yes.
A. Live Play May Interpret “Session” to Consist of One Game at One Location
Changing casinos almost certainly ends a “session.” Changing games within the same casino is murkier and depends on facts and circumstances. Recordkeeping is of critical importance.
Russ Fox: “If you move from casino to casino, it is two sessions. If you change game activity within a casino, let’s say I start with video poker, I move to craps, and then I finish with poker. It’s unclear. There are cases going both ways. . . . [T]hat is something to discuss with your tax professional for online play.”
B. Online Play May Interpret “Session” to Include Simultaneously Play on Multiple Sites
Online gambling often involves multiple tables, formats, and even sites at the same time, making a broader “session” definition more defensible.
Russ shared his view that a single day of online play – from first buy-in to final cash-out – is likely to be considered one session, even when multiple sites are involved simultaneously. While not guaranteed, he believes this approach would likely “pass muster” with the IRS.
Russ Fox: “Generally, we believe you can lump a day’s play together because online is different. You’ll have multiple tables open, and so it’s basically okay on today, January 22, I start my session with $500, I end it with $1200, so I’ve won $700.
“I personally believe the day-long session is likely to pass muster with the IRS. Given the nature of online [play], I am fairly certain that you can lump together multiple sites at the same time, because you are playing multiple sites at the same time.”
C. “Breaks” May Impact When One “Session” Ends and Another Begins
Short breaks usually do not end a session; leaving the gambling environment for an extended period likely does. Courts, not the IRS, ultimately decide these cases, and outcomes often depend on the length and nature of the break.
Russ Fox: “In live play, let’s say you’re playing at the Wynn casino, and you take a lunch break and come back, it’s still considered one session. You leave the casino, go to your room, go and have some fun at the swimming pool, and come back and play later. That is two sessions.
How a court would rule likely is going to be dependent upon the length of the break. Unfortunately, it’s courts that determine precedent, not the IRS. Court cases on gambling, frankly, any case on tax, takes a long, long time before it actually gets to the presidential state.”
D. A “Session” Must be a Reasonable Length and Supported by Reasonable Records
No matter how sessions are defined, they must be reasonable and documented. Russ emphasized that taxpayers who lose gambling cases in tax court often do so because they kept poor or nonexistent records. Courts show little sympathy for undocumented claims.
Russ Fox: “Be reasonable. . . . A ‘session’ is not going to last a week. A ‘session’ is not going to last a year. That is very, very obvious. You know, common sense gives you the answer.
Most people who get audited have good, or at least reasonable, records. The taxpayers who get audited and lose their gambling cases, a lot of them are amateurs who just don’t keep any records. And the tax court has no sympathy for people who have no records.”
2. Sports Bettors Likely Cannot Lump Together Sports Bets
Sports bettors are especially exposed. Unlike poker or casino play, individual sports bets are generally unrelated events constituting unique “sessions” per bet.
Russ Fox: “Can you lump together two different sports bets? Probably not.
If I bet tonight’s basketball games, [and] I bet on the Lakers and I bet on the Warriors. There’s, nothing related in those games. They are two separate events, and I think a court is likely to rule there are two different sessions. That makes it so that you’re going to have a lot of wins and a lot of losses. That’s bad.”
Russ believes courts would likely treat each bet as its own session, resulting in many taxable wins and separately limited losses—an outcome that can significantly increase tax liability.
3. Professionals Can Only Deduct 90% of Expenses
Unfortunately for professional players, this is not just about losses. The new law limits deductions on both gambling losses and business expenses for professional gamblers. Travel, hotels, training tools, and study resources are now only deductible at 90%, meaning that real money is hemorrhaged away over time, especially for players competing internationally or operating on thin margins.
Russ Fox: “[F]or professionals, [the new tax is] not just a penalty on losing sessions. It’s a penalty on expenses.
For example, for things like the Triton, flying to say South Korea or Montenegro, you’re only deducting 90% of that flight and the hotel. And studying, you know, the tools that players now need to use, you’re only getting 90 cents on the dollar. I mean, the old saying, ‘a billion here and a billion there, and you have real money.’ Well, for poker players, $1 here and $1 there, and it’s real money.”
4. The New 90% Deduction Law Will Likely Be Reversed Within Ten Years
Fortunately, Russ is confident that the law will be repealed, though timing remains uncertain and could drag out. Despite bipartisan support, legislative gridlock may delay repeal, potentially for years.
Russ Fox: “I am certain that sometime in the next ten years this law will be repealed. Unfortunately, I’m not certain it will be done this year. This law just does makes sense. There is bipartisan support for repealing…, but this Congress would have trouble passing a law saying the sun rises in the east and sets in West.”
5. You May Be Able to Deduct Sweepstake Coins Buy-Ins As Losses With Form 8275
Sweepstakes winnings are taxable, but deducting losses requires careful handling. Russ explained that Form 8275 may be necessary to disclose the position taken on a tax return, especially when income is reported on a 1099 in a way that does not reflect its true substance. The goal is transparency: explaining what was done and why, so that if the IRS questions it later, the taxpayer has already disclosed their reasoning.
Russ Fox: “Sweepstakes winnings on sweepstakes casinos are absolutely taxable. The issue is a sweepstakes model under that 1099 miscellaneous is our issue. In theory, you can’t take losses against them.
If you’re a professional gambler, and this income is related to really gambling winnings, you can still put it on your schedule C, and you can’t take losses against it. if you’re an amateur gambler, If you wish to take losses, you a, better have good records. B, you’re going to need proof of those losses, C, you’re going to have to discuss this with your tax professional on the correct manner to put it on your tax return, D a disclosure statement, the IRS has one called form 8275 is almost certainly needed on your tax return. So you explain what you’re doing and why to the IRS.
There’s a settled rule on tax called that the form basically doesn’t matter. It’s what the actual income is that is determinative. So, for example, if I pay you interest and I send you a 1099 dividend, saying it’s dividend income, but it’s really interest. You can put it in the right place. It’s common sense.
So, in this situation, you can put it in the right place. The problem is the IRS looks at things instead of substance over form. They tend to look at form over substance, because it’s all done with computers, and the computer must be right. So that is why you need to attach an explanation of what you are doing and why. So, if you get a notice, you can respond, ‘hey, I disclosed this, and here is why it was right then, and here is why it is right today.’”
6. Reach Out to Representatives and Help Locate a Professional Gambler in South Dakota
Constituent pressure matters, but lawmakers respond most strongly to voters from their own districts.
Russ urged listeners, particularly those in South Dakota, to reach out to influential leaders like Senate Majority Leader John Thune or Speaker Mike Johnson. Even outside those states, contacting representatives and explaining how the law changes behavior and reduces tax revenue can make a difference.
Russ Fox: “[I]f anyone listening happens to be a South Dakota professional gambler or amateur gambler knows John Tune, who is the Senate Majority Leader and/or is a constituent of Mike Johnson, who is the Speaker of the House, those would be good people to talk to. Those are the people who could make this happen, perhaps sooner rather than later.
Andrew Brokos then asked if “assuming I’m not a constituent of one of those two people, is there anything else you’re aware of that would be like useful for me to do?”
Russ Fox: “[Your representatives] all have websites and contact forms. If you’re in Nevada, you don’t have to worry, because all four Nevada Congressmen and Congresswomen are all supporting a repeal. You don’t have to do a thing, same with the senators in Nevada.
But if you’re in another state, then it takes a couple of minutes. Whoever your representative is, you can go on the House website and find it, write to your senators, use the contact page, and very nicely, explain, especially if you’re a professional making your living, ‘I’ve been paying taxes, and now the revenue coming into the US government will be less because of this law. I am changing my behavior, which is what’s going to happen.’
One of my favorite quotes is from Paul Volcker, former Federal Reserve Chairman, ‘Whatever you tax, you get less of.’ It’s very, very clear to me, this is going to cut gambling revenues and it’s going to cut taxes based on gambling over time.
7. The Gambling Tax Impacts Everyone in the Gambling Eco-System
The 90% gambling loss deduction law affects tourism, hospitality, casino workers, and tip-based economies. As co-host Carlos Welch noted, reduced gambling activity undermines related policy goals—like tax-free tips—by shrinking the very economic activity those policies depend on.
Russ Fox: “[The new tax] penalizes everyone involved in gambling, and it also hurts, you know, on a secondary level, it hurts the tourism industry, the hospitality industry related to gambling.
Carlos Welch: I was watching the hearing yesterday, and one of the politicians that was speaking out against this made a great point, which is another big part of the One Big Beautiful Bill. Legislation was passed so that there are no taxes on tips, but now certain people in states like Nevada who live off of tips get less business from these gamblers. So, it kind of hurts the whole idea of like no tax on tips. Well, if there’s no gamblers to give you tips in the first place, then that really isn’t a benefit.”
Conclusion:
Russ Fox’s appearance on Thinking Poker makes one thing clear: the new gambling tax law is not just a technical change. It is a structural shift with real consequences for how people play, travel, work, and earn within the gambling ecosystem.
From the undefined nature of a “session” to the ripple effects on tourism and tipped workers, this law introduces uncertainty where clarity is essential and was historically present. While repeal may eventually come, the reality for now is that players (and especially professionals) must operate under rules that discourage activity, distort behavior, and reduce long-term tax revenue.
For gamblers, the immediate lessons are simple but critical: keep meticulous records, be reasonable in defining sessions, understand that different forms of gambling could likely be treated differently, and consult qualified tax professionals before taking aggressive positions.
For everyone else, from operators, workers, policymakers, and community members, the takeaway is broader. Gambling does not exist in a vacuum. When policy penalizes participation, the consequences extend far beyond the table.
Railbird Creations thanks Russ Fox for his time, insight, and continued work translating complex tax law into practical guidance for the gambling community. We also thank Andrew Brokos and Carlos Welch encourage readers to listen to Episode 492 of Thinking Poker in full and to engage thoughtfully with their representatives as this issue continues to evolve.
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