Daniel Negreanu cashed for $1,478,240 at the 2025 World Series of Poker and paid $1,297,143 in buy-ins to get there. His profit for the summer was $181,097, about 14% of what he spent. A Tax Foundation analysis of those figures estimated that under the federal rule taking effect in 2026, his tax bill on the same results would rise from $67,006 to about $115,000, and his take-home pay would fall from $114,091 to $66,097. These are illustrative federal tax estimates rather than his actual personal tax liability. A profession with that ratio of turnover to profit has to be run with the habits of a business, because a small error in cost or tax treatment can turn a profitable year into a losing one.
Thin Margins on Large Turnover
Poker careers move far more money than they keep. Erik Seidel, who finished second in the World Series of Poker Main Event in 1988, turned professional in 1995 and has won more than $48 million in live tournaments, estimates that he has played roughly 130 to 150 events a year, counting re-entries. His tournament winnings in 2025 topped $2.8 million. Even at that level, he has said a professional is not guaranteed a profit at the end of a year.
The house takes its share first. Card rooms collect a small cut of cash-game pots, while tournaments generally charge fees as part of the entry cost. These charges reduce the amount available for players to win, and many professionals operate on relatively narrow margins. A player in that position earns a living from volume and a consistent edge, and any added cost, including rake and travel, comes directly out of a thin profit.
Buy-ins are the main cost of the business. They are paid before any revenue arrives, and most of them produce no return. A player with a real edge recovers that cost across a large sample of events, so the financial problem is to fund enough events to reach the sample without running out of money first. The bankroll is working capital, kept separate from household money.
IRS Record Requirements
The US Supreme Court established in Commissioner v. Groetzinger (1987) that gambling pursued full time, in good faith and with regularity, for the production of income for a livelihood, can qualify as a trade or business. A qualifying professional generally reports gambling business income on Schedule C, the same form a sole proprietor uses, and the burden of supporting that status falls on the player.
A professional supports that status with records. Gambling winnings are taxable in the United States, so a professional’s ledger has to include every format played, from live cash games and tournaments to online poker games. Each entry should record the date, the venue or platform, the buy-in or amount wagered, and the result, with supporting documentation where available. A player who cannot produce that ledger in an audit has a much weaker claim to professional treatment. Courts may also consider factors from the hobby-loss regulations, which look at how the activity is run as well as at the money involved, and the AICPA’s guidance on the taxation of gambling notes the importance of proper records.
Staking Deals and Markup
In staking, a backer provides the money for a player’s games in exchange for an agreed share of the returns. One common long-term arrangement is 50-50 plus makeup, in which the backer pays 100% of the buy-ins and profits are split evenly after any accumulated losses have been recovered. Under such an agreement, losses generally must be won back before the player receives another profit share. Backers in these deals may provide coaching as well, since the player’s improvement raises the potential return on their money.
Selling action is the event-by-event version. A player sells percentages of a single tournament entry to several investors, often at a markup that prices in the player’s edge. At a 1.2 markup in a $10,000 tournament, an investor pays $1,200 for 10% of the action. If the player then cashes for $40,000, that investor’s share is $4,000 under an agreement based on gross tournament proceeds. A player with a provable record can charge more, which makes the record itself a financial asset. The structure resembles equity financing. At a 1.2 markup, selling 50% of a $10,000 entry brings in $6,000 from investors, so the player pays $4,000 personally and keeps half of any prize, subject to the agreement’s terms.
Deductible Expenses Under the 2026 Rule
Professional gamblers may deduct qualifying ordinary and necessary business expenses, including eligible travel, lodging, tournament-related costs and the deductible portion of business meals, subject to applicable tax rules. Since the 2017 tax law, wagering losses and related business expenses have been subject to restrictions that generally prevent professional gamblers from using those deductions to create an overall gambling business loss.
The 2026 change goes further. Under the One Big Beautiful Bill Act, the IRS explains that deductions for wagering losses are limited to 90% of their amount and cannot exceed wagering gains. The restriction also applies to otherwise allowable deductions incurred in carrying on wagering transactions. As a result, a player who breaks even on wagers may still have taxable gambling income. The Joint Committee on Taxation estimated the provision would raise approximately $1.1 billion over eight years, a figure the Tax Foundation has said could shrink as gamblers change their behaviour in response.
Congress has considered three bipartisan proposals, the FAIR BET Act, the WAGER Act and the FULL HOUSE Act, aimed at restoring full deductibility. In September 2026, the House Ways and Means Committee approved the Digital Asset Tax Certainty Act, which included a provision to reverse the new gambling-loss deduction restriction. The committee approved the legislation by a 38-5 vote, but further congressional approval was still required. The proposal’s progress remained important to professional players planning their tax exposure.
Accountants who work with professional gamblers now treat the rule as a planning input. Russ Fox, an enrolled agent at Clayton Financial and Tax who specialises in gambling tax, has advised clients to rerun their 2025 results with wagering losses capped at 90% and to treat that figure as a preview of how the 2026 rules could affect them.
Smaller Schedules for 2026
Some players have answered the change by cutting volume. Seidel, who is 66 and based in Las Vegas, announced a semi-retirement for 2026, saying he planned to play perhaps 25% of his usual schedule and skip almost every high roller event costing $25,000 or more. He has a long career behind him and can absorb a slower year, and he has said the burden falls hardest on younger players who cannot.
A professional with a thin edge weighs the expected profit from each event against the tax exposure it creates. Fox has said that several clients who played professionally stopped because the margins had become too small, and the events most affected are the expensive ones, where the turnover is largest.
Income Beyond the Tables
Players with income from sponsorships or video channels face less dependence on tournament results, because that income does not fluctuate directly with the year’s variance at the tables. Doug Polk, a high-stakes professional, told CNBC that players without such income are the ones most likely to stop turning a profit under the new rule.
Coaching, content creation and sponsorship agreements can provide additional revenue streams, although each comes with its own costs and tax obligations. For professionals managing a poker career like a business, income diversification can reduce reliance on a single source of earnings during losing stretches.
The Cost of Skipping the Books
Under the 2026 rule, a player with $100,000 in winnings and $110,000 in losses, down $10,000 for the year, can deduct only $99,000 in wagering losses under the simplified calculation, leaving $1,000 in gambling income after that deduction and before other applicable tax adjustments. Without a full record of every session, that player may not be able to prove the losses at all, and an unsupported deduction can be disallowed, potentially leaving the full $100,000 in winnings exposed to taxation.
A ledger kept session by session takes a few minutes a day. With it, that losing year can still produce $1,000 in gambling income after the permitted wagering-loss deduction under the simplified example, while without adequate records the amount subject to tax could be substantially higher. The actual tax owed depends on the player’s complete financial circumstances, but the business lesson is the same: accurate records protect the money that remains after the cards are put away.
