Polymarket suggests Trump's gambling tax cap is 50/50 to be removed
The prediction markets have a sliver of optimism about them, suggesting the controversial new gambling rules may be revoked this year.
In one of the great ironies, you can actually gamble on whether gambling will be economically viable in America this year.
The two leading prediction markets, Kalshi and Polymarket, both have markets on whether Donald Trump's cap on gambling losses will be reversed in 2026. The new tax rule, introduced this year, means gamblers can only deduct 90% of what they lose on tax returns.
The Kalshi market currently suggests we have a 37% chance of it being reversed in 2026, with an 11% shot of being repealed in the first quarter of the year.
Polymarket is a little bit more optimistic, suggesting we are slightly better than a coinflip to see the end of it this year.
If you were to trade on these markets in the US and lose, you would not fall foul of the 90% cap, because prediction markets are seen as financial products, rather than gambling.
It will be repealed, but when?
Most gambling and tax experts believe the cap will be reversed, but few think it will be soon. When the industry clearly shows how negatively the cap impacts economies like Las Vegas, might we see more urgency in getting it reversed?
That does not mean industry insiders and advocates are not fighting the good fight, and yesterday Dina Titus was back, testifying about the importance of changing the cap back to what it was last year.
I testified before the House Rules Committee about the urgent need to restore the gambling loss tax deduction to 100%.
I submitted an amendment to this week’s Appropriations bill that would do just that.
It’s time to get this fair, common sense fix over the finish line. pic.twitter.com/P8ArWJGmQ2
— Dina Titus (@repdinatitus) January 21, 2026
Of course, the ideal outcome would be Donald Trump pulling off one of his trademark U-turns and actually going with tax-free gambling in the US, which he hinted at last year. Right now, most American gamblers would be happy with a return to how things were a month ago.
