Gambling players and a growing number of politicians oppose cutting tax deductions for gambling losses. Restoring the previous level will not be easy.
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LAS VEGAS – Restoring a 100 percent loss deduction in the gambling tax is the top legislative priority for gambling stakeholders. Returning to that threshold has not been easy in Congress, where a government shutdown before a key deadline presents another obstacle.
Key insights
- Gaming leaders are calling on Congress to restore the 100% loss deduction in the gaming tax, which was reduced to 90% as part of the One Big Beautiful Bill Act.
- The move to 90% could have significant financial consequences for professional players and casinos.
- With the government shutdown and limited legislative time, lawmakers face growing pressure to act before the new deduction takes effect on Jan. 1.
The 100% loss deduction was reduced to 90% as part of the sweeping One Big Beautiful Bill Act, which took effect in July. The cut was added to the bill days before it was signed into law and was criticized by members of both parties.
However, Congress was unable to act on several proposals to restore the deduction. The never-ending government shutdown has brought all other legislative efforts to a halt.
With the reduction in the deduction set to take place on January 1, time is running out for the gaming industry and Congress to restore the previous deduction.
“In tax law, for decades you could offset your winnings against your losses, and all of a sudden this change happened overnight,” Rick Limardo, senior vice president of government affairs at MGM, said at a gaming industry conference this week. “People are frustrated and it will certainly affect player behavior so we are definitely concerned.”
Gambling tax losses background
Players who itemized their tax returns were able to deduct 100% of their gambling losses from their winnings, so a hypothetical player who won $100,000 and lost $100,000 in a calendar year would not have to pay taxes on their winnings. Under the OBBB, that same player could only deduct 90% of his losses, meaning he had to pay taxes on $10,000 of “phantom income” that he was unaware of.
The House of Representatives passed a version of the OBBB that did not include the deduction change. The Senate added the cut days before the Trump administration's self-imposed July 4 deadline to sign the bill, estimated to generate $1 billion more in tax revenue and offset some of the bill's trillions of dollars in tax cuts.
With the deadline approaching, the House didn't have time to amend the Senate's version, meaning it had to approve all of the legislation, including the gambling forfeits provision.
AGA Vice President Chris Cylke, who has pushed for the 100 percent tax deduction for gambling losses on Capitol Hill, said there is bipartisan support for restoration, but the government shutdown and current political divisions make it difficult to pass legislation
— Ryan Butler (@ButlerBets) October 7, 2025
The bill will only directly impact a small percentage of Americans who report gambling losses, but its impact could have far-reaching consequences for the industry.
The taxpayers listed for gambling losses are typically professional and high roller gamblers, the industry's most valuable customers. Their money provides the industry with liquidity – and profits – that allow it to serve the vast majority of smaller market participants.
If taxes were too high, gaming stakeholders argue, major players would be forced out of the market, creating a detrimental trickle down effect for the entire industry.
This could mean professional players moving to tax-free offshore or international gambling sites or tournaments rather than regulated US offerings. If the larger players exit legal gambling companies, those companies could face massive economic declines, with annual losses estimated at billions of dollars.
Speaking at the Global Gaming Expo (G2E) conference in Las Vegas this week, Limardo said it was “by far” the biggest topic gamers had talked about in his eight years at MGM.
Next Steps
Nevada Rep. Dina Titus, whose district includes parts of the Las Vegas Strip, introduced legislation to restore the 100 percent deduction shortly after the OBBB was signed. The bill has gained more than a dozen bipartisan co-sponsors but failed to receive a vote in the House Ways and Means Committee, the first step in the lengthy legislative process.
Ways and Means Committee Chairman Jason Smith said he supports the bill, but with Congress not meeting during the government shutdown, there is less time with each passing day to advance the bill. An attempt to include the tax deduction formula in another House bill failed, and there appears to be dwindling opportunity for passage by Jan. 1.
Restoring the 100 percent deduction, either as a standalone measure or as part of a larger bill, must pass both the full Senate and the House of Representatives before it can take effect.
Advocates outside Congress say they are encouraged by feedback on the bill from members of both parties, with lawmakers largely saying the tax is unfair. The 90 percent loss was included as a revenue generation tool rather than a political incentive, which gaming stakeholders say gives the 100 percent loss restoration more hope of passage by Congress.
It will now take less than three months for the current deduction change to take effect. Meanwhile, major casino operators, including MGM, as well as gambling industry advocates such as the American Gambling Association, are reiterating their efforts to pass the law, but are aware of the difficulties ahead.
“The challenge is that the government is currently repressing more partisan parties than ever before,” AGA senior vice president Chris Cylke said during a G2E panel this week. “I don’t think anyone can tell you when the government will reopen, let alone what the vehicles will look like at the end of the year where this issue might be fixed.”
“The message here is that we are working hard to fix the problem.”