It's Clear That Gamblers Should Pay More Taxes Than Investors

Investing aids the economy but gambling is simply consumption

- ALLISON SCHRAGER

At a recent poker game, I sat across from a young man who played professionally online. He lost and left early, but not before telling the table how angry he was about a tax increase approved by the US Congress last summer. Now he'd be able to write off only 90% of his losses. He got even angrier when I told him this was one of those rare taxes I agreed with.

As he saw it, this was unfair. People can write off all of their business or stock market losses, so why shouldn't he be able to write off all of his poker losses? Until this tax provision became law as part of the US One Big Beautiful Bill, he was allowed to.

As I told him, online poker is different. Speculating on stocks is still investing. Gambling is more like amusement—consumption, to use the economic term. And just as people can't write off the cost of a movie ticket if they don't like the film, so gamblers shouldn't be able to write off their losses. In fact, they're lucky to be able to write off 90%.

That is not to say there is anything wrong with gambling. But should it be encouraged by the tax code the same way investing is? The tax code encourages investment activity for a reason: It creates wealth and jobs, and helps expand the economy.