Republican Tax Proposal Threatens Kentucky’s Horse Racing Industry

The legislation proposes changing how gambling losses are taxed, reducing the tax-deductible amount from 100% to 90%

Ziv Chen

Last Updated: July 3, 2025 3:29 PM EDT • 2 minute read

Republican Tax Proposal Threatens Kentucky’s Horse Racing Industry — Pictured: The field of horses made their way down a sloppy 1st turn at the Kentucky Derby at Churchill Downs in Kentucky. Photo by Jeff Faughender/Courier Journal / USA TODAY NETWORK via Imagn Images.

A tax provision in the so-called ‘Big Beautiful Bill’ being debated in the US Congress could be disastrous for the Kentucky horse racing industry. The Democratic Congressional Campaign Committee has highlighted that change.

The legislation proposes changing how gambling losses are taxed, reducing the tax-deductible amount from 100% to 90%. Critics of the provision have warned that this could result in gamblers being taxed on winnings they didn’t receive.

The impact could be significant in Kentucky, where horse racing and historic horse betting are a considerable part of the state economy. Analysts suggest that the bill could lead to a fall in betting activity, which could threaten the viability of Kentucky’s racing venues.

“Kentucky’s horse racing industry is a cornerstone of American culture and Republicans are taking a hatchet to it all to pay for billionaire tax cuts. This is yet another example of Republicans’ betrayal of the American people,” said Democratic Congressional Campaign Committee spokesperson Madison Andrus, commenting on the proposal.

The bill passed the Senate earlier this week on Vice President J D Vance's casting vote and will now return to the House of Representatives. Republicans hope to pass it by July 4.

Record-breaking Derby views

The controversy over the betting tax comes in the wake of a hugely successful Kentucky Derby. This year’s race, the 151st edition of the famous contest, achieved NBC’s largest audience for the event since 1989, with an average of 17.7 million viewers and a peak of 21.8 million.

Online broadcaster Peacock also reported record-breaking streaming numbers, with an average of 959,000 viewers, a new high for horse racing.

The race itself was won by Sovereignty, jockeyed by Junior Alvarado, who claimed his first career Derby victory. The total purse was $5 million, with Alvarado earning $310,000.

The figures show that ten of the last 12 Kentucky Derbies have attracted over 15 million viewers, which racing insiders say shows the enduring support for this prestigious event. It's always a big draw for the best horse racing betting sites.

This year’s race was also a milestone for casino operator Caesars and its links with horse racing. Shortly before the race, the company announced that it had integrated pari-mutuel betting into its sportsbook app in Kentucky and Colorado.

The update allows users to switch quickly between horse race wagering and sports betting via a shared wallet. It also includes live streaming of races from over 300 venues around the world, along with access to statistics, loyalty rewards, and handicapping data.

Written by:
Ziv Chen

Ziv has over two decades of experience in the igaming and sports betting industry, having served in senior marketing and business development positions with both B2C and B2B companies, including Playtech and Microgaming. In 2019, Ziv decided to pursue his passion for writing and became a fulltime industry journalist, covering casino, sports, and gambling business news. He’s specialties include casino games and technology, US state gambling regulation, company performance, as well as gambling affiliates and marketing. As a Pitt graduate, Ziv is a diehard fan of all Pittsburgh sports teams, with the Steelers at the top of the list. In his free time, he enjoys reading crime fiction, biographies (mainly of sports personalities, but not only) and American history. Ziv’s Favorite quote: “We're going to pursue perfection, knowing full well we won't catch it, but we're going to relentlessly chase it," Mike Tomlin, Pittsburgh Steelers Head Coach.