New gambling tax deduction rules threaten industry’s future as Senate Republicans halted efforts to reverse recent tax provisions impacting professional gamblers. Democratic Sen. Catherine Cortez Masto of Nevada attempted to push through a bill to annul these changes, but her proposal met resistance from Republican Sen. Todd Young of Indiana, leaving the situation unresolved for now.
Impact of New Gambling Tax Deduction Laws
The controversy over gambling tax deduction rules is just starting to unfold, reflecting the broader consequences of the recently enacted tax law. This legislation, extending over 900 pages and signed by President Donald Trump, affects various federal programs and the tax code. Many lawmakers are still coming to grips with its details.
Sen. Cortez Masto highlighted that numerous Republicans and Democrats were unaware of the inclusion of this gambling-related provision. Under the new regulations, starting in 2026, individuals can only deduct 90% of their gambling losses compared to the previous full deduction. This change primarily impacts high-stakes gamblers who itemize and claim their deductions, causing substantial financial implications.
Under the old rule, someone winning and losing $100,000 could offset taxes with a full deduction. With the new rule, they can only deduct $90,000, owing taxes on $10,000 despite breaking even. Phil Galfond, a professional poker player, expressed concerns that this amendment could end professional gambling in the U.S. and adversely affect casual players.
Senate’s Response and Economic Implications
This provision was quietly introduced on June 16 by Senate Finance Committee Chair Mike Crapo, catching many senators and the public off guard. Sen. Ron Wyden criticized the hurried process, which failed to thoroughly evaluate all policy implications, posing risks to the gambling community.
The measure is projected to raise over $1.1 billion in tax revenue over eight years. However, the entire tax package, according to the Congressional Budget Office, will increase the deficit by nearly $3.3 trillion from 2025 to 2034. Republicans argue this procedural change was essential for passing the bill without Democratic support.
Sen. Young, backing the policy, refused to endorse Cortez Masto’s proposal unless Democrats agreed to additional terms. However, efforts continue, with bipartisan pushback emerging. Cortez Masto’s new bill has been introduced in the committee, and Nevada Democratic Rep. Dina Titus has proposed similar legislation to reinstate the full gambling deduction. This issue, keenly watched by gamblers, will develop further in the coming months. Read more news.
