New York’s SB 7876 Seeks to End Gambling Loss Deductions
New York Senator Andrew Gounardes (D-26) introduced SB 7876, a bill aiming to eliminate all gambling loss deductions from state tax returns, reducing allowable deductions to 0%. Currently, professional gamblers in New York can deduct losses up to their winnings, but the proposed law would end this practice, potentially generating $50 million annually for the state.
SB 7876’s Impact on New York Gamblers
SB 7876 seeks to amend New York’s tax code to prevent any deductions for gambling losses, targeting both professional and recreational players.
Senator Gounardes argued the bill would “stop subsidizing people who gamble and encouraging them to keep playing to cover losses.” In 2015, 68,000 taxpayers deducted $900 million in losses, highlighting the scale of potential revenue.
The bill passed the Senate Budget and Revenue Committee 5-2 in May but remains stalled after the legislative session ended on June 18.
It will automatically carry over to the 2026 session starting in January, with a possible special session this fall if Governor Kathy Hochul addresses budget issues.
Federal Overlap with OBBB
The federal OBBB, passed in 2025, limits gambling loss deductions to 90%, meaning a player breaking even on $1 million in wins and losses would owe taxes on $100,000. SB 7876 goes further, proposing zero state deductions, compounding the tax burden for New Yorkers.
Gounardes initially misstated that the 2017 Tax Cuts and Jobs Act banned federal deductions, but a committee member clarified that federal law allows them, though OBBB’s 90% cap partially aligns with his intent.
With New York’s 51% sports betting tax rate already among the nation’s highest, SB 7876 brings a serious risk of pushing players to unregulated offshore platforms, reducing state revenue and consumer protections.
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