This is an open letter to both poker tournament operators and cash game room managers.
I'm sure you are all aware of the change in the US tax law for this year that restricts deducting gambling losses to 90% of their total, while requiring people to report 100% of their winnings. A quick example: you hit a $10,000 jackpot on a slot machine at your local casino. You can show 'coin-in' of $10,000.
In 2025, your wins and losses cancel out, and you owe no tax. In 2026, you claim a $10,000 win but only a $9,000 loss and thus must pay tax on $1,000, even though you broke even playing slots.
If you're holding out hope that there will be a legislative correction to eliminate this change... please stop. The United States Congress is in one of its most dysfunctional states right now, which is no mean feat. There is a close enough to 100% chance you will be filing your 2026 returns based on the current law.
I'm not here to discuss the origins, fairness, or any other meta-aspect of the change. I want to give my perspective on how this change might ripple through our industry.
Not all tournaments are created equal
I expect the tax effect to be unevenly distributed across the tournament world. In the lowest stakes events (think the 11am daily $150 at The Orleans), I foresee little or no change. These are recreational events played by recreational players, and they (both the events and the players) are the bread and butter of our industry. With the minimum W2-G reporting minimum raised from $1,200 to $2,000 for 2026, all but first and maybe second place money will slip in below the reporting requirement.
Thus I expect that corner of our little universe to continue virtually unchanged.
Above that level, events with buy-ins of $1,000 or more, I believe the impact will be dramatic. People who are grinding the tournament circuit for profit will have to look very closely at their spreadsheets.
The $150 Daily at The Orleans is unlikely to be impacted much.
The dirty little secret has been uncovered
The poker tournament world lives and thrives on some of the most mind-bending accounting imaginable. Maybe even beyond imaginable. Consider the following analyst call with Tim Cook, CEO of Apple:
Tim: "We had three billion dollars in revenue last quarter!"
Analysts: "Okay. How much profit did you make?"
Tim: "Three billion dollars! Imagine that! In fact, here's a website that we call 'Cupertino Mob' – it shows that we had more revenue than any other company in California!"
Analysts: Looking for the 'costs' section in their presentation handout.
PokerOrg's own Adam Hampton recently lifted the lid on this wackiness with a fascinating piece revolving around Stephen Chidwick's revelation of his career profits. There's understandably a fair amount of hand-waving going on. But suffice it to say that some tournament crushers, whose names you'd immediately recognize, are likely profiting (there's that word again) far less than a journeyman software engineer or corporate attorney makes.
It needs to be emphasized that the software engineer and attorney are not required to deposit cash at the front desk when they walk into the office.
In short, profit margins are razor-thin in the tournament business. There will be many tournament 'pros' who, in the new tax regime, will be net losing players. I expect many of those players to disappear from the scene altogether or cut way back as they face the reality of needing a reliable income to support their tournament habit.
We don't think Stephen Chidwick's volume will dip much in 2026.What about the high rollers?
I have no idea. The air is so rarefied there that I have zero knowledge or opinion. Will Triton suffer? I suppose we just watch and wait. If there's a drop-off in American players, it won't be hard to guess the reason. (Also, big shout-out to absolute OG Luca Vivaldi, one of the nicest guys in the business, who has the strongest 'tie' game in all of poker.)
Mid-stakes operators – brace for impact
I hope I'm proven wrong, but I think the mid-stakes tournaments will suffer a significant drop-off in entries. I just don't see how the accounting works out otherwise. You may have to start rethinking tournament buy-ins and payout structures.
You may have to get creative with the tournament format. Like some kind of crazy 'survivor' format – everybody buys in for $500, and when you've eliminated 75% of the field, the surviving 25% get $1800 each, and they go home.
Cash games over tournaments?
To be clear, in theory, there's no difference between tournaments and cash games.
Cash game players have the same legal obligation to declare their wins and losses as tournament players do. Wise poker players of all stripes declare their winnings because (a) it's the right thing to do, and (b) to the degree that you amass meaningful unreported cash, you can't use it for anything substantial (car, house, etc) without raising many red flags.
In practice, of course, live cash game wins and losses are virtually impossible to track. It's likely that many cash game winners are under-reporting their winnings, if they're declaring them at all. Contrast this with tournaments, where players are issued a W2-G form (which is also sent to the IRS). Online cash play is another matter, and it's reasonable to think the authorities might go to regulated US online operators and collect win/loss records.
Could we see more players playing cash games in 2026? If we do, let's make them feel welcome.Prepare a soft landing for tournament émigrés
If there's a word that defines the difference between tournament and cash poker, it would be... 'variance.' Heh. But that's not what I'm talking about. In this context, the operative word is 'transparency.' Tournament poker is easy. You look on Poker Atlas or on the host website. It's $500+$30 no-limit hold'em. Starts at 2pm. Re-entry for the first four levels. As my British friends say, "Does exactly what it says on the tin."
Cash games are a different matter. At a minimum, straddles can turn a $5BB game into a $10 (or $20) straddle-fest at a moment's notice. The poor newcomer from the tournament side of the room thinks that there will be a loud chime and an announcement from the TD when the blinds go up.
The underlying problem here is that, in cash games, the players have a great deal of leeway in how the game runs. Probably more than they should.
There's a decent potential for a bunch of former tournament denizens to dip a toe into cash waters. We (yes, I'm a cash player) should make it as easy and painless as possible. Give them a predictable and transparent experience when they sit at a cash table – just as predictable and transparent as they'd expect in a well-run tournament. Fortunately, the big issue (straddles) is easily fixed, as proven by the Wynn and others.
Cash game managers should anticipate and prepare for the tournament émigrés. Welcome them, make the transition easy, answer questions ("This is how 'run it twice' works..."). Let them see how much better cash games are than tournaments. Oh, did I say that part out loud?
Change is hard
The tax change is here, and no, it's not going to get fixed this year, if ever. We as an industry need to prepare for it and do what we can to soften the blow. We've been through worse (UIGEA and Black Friday come to mind), and we'll get through this. But intelligent and thoughtful preparation will mitigate the worst of it.
Here's to a thriving and vibrant poker industry in 2026.
