LAS VEGAS - Restoring a 100% gambling tax loss deduction is the top legislative priority for gambling stakeholders. Returning that threshold has not come easily in Congress, where a government shutdown posses another roadblock ahead of a key deadline.
Key Takeaways
- Gaming leaders are urging Congress to restore the 100% gambling tax loss deduction, which was reduced to 90% under the One Big Beautiful Bill Act.
- The change to 90% could have major financial consequences for professional gamblers and casinos.
- With a government shutdown and limited legislative time, lawmakers face growing pressure to act before the new deduction takes effect Jan. 1.
The 100% loss deduction was reduced to 90% as part of the sweeping One Big Beautiful Bill Act signed into law in July. A provision added to the bill a few days before it was signed into law, the reduction has been criticized by members of both parties.
But Congress has not been able to act on several proposals to restore the deduction. The government shutdown, which has no end in site, has stopped all other legislative efforts.
With the deduction decrease set to take place Jan. 1, the gaming industry and Congress are running out of time to restore the previous deduction.
“You've been able to net your winnings against your losses for decades in the tax code, and all of a sudden this change happened overnight,” said MGM senior vice president of government affairs Rick Limardo at a gaming industry conference this week. “People are frustrated, and it's certainly going to impact the behavior of players, so we are certainly concerned.”
Gambling tax loss background
Gamblers who itemize their tax returns have been able to deduct 100% of their gambling losses against their wins, so a hypothetical gambler 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 gambler could only deduct 90% of their losses, meaning they would have to pay taxes on $10,000 in “phantom” income they didn’t realize.
The House of Representatives passed a version of the OBBB that didn’t include the deduction change. The Senate added the reduction, days before the Trump Administration’s self-imposed July 4 deadline to sign the bill into law, to generate an estimated billion dollars in next tax revenue to offset a portion of the trillions of dollars in tax cuts from the bill.
With the deadline looming, the House didn’t have time to change the Senate version, meaning it had to agree to the entire legislation, gambling loss provision included.
AGA Vice President Chris Cylke, who has lobbied on Capitol Hill for the 100% gambling loss tax deduction, said there is bipartisan support for the restoration, but the government shutdown and current political divides makes passing legislation difficult
— Ryan Butler (@ButlerBets) October 7, 2025
The bill only directly impacts a small percentage of Americans who itemize gambling losses, but its effects could have far-reaching consequences on the industry.
The itemized gambling loss taxpayers are typically professional and “high roller” gamblers, the industry’s most valuable customers. Their money gives the industry liquidity - and profits - that allow them to cater to the larger majority of smaller-volume players.
If the taxes are too punitive, gaming stakeholders argue, major players would be forced out, leaving a detrimental trickle effect for the industry overall.
This could mean professional gamblers switch to untaxed offshore or international gambling sites or tournaments instead of regulated U.S. offerings. With the larger players out of the legal gambling entities, those businesses would face potentially massive economic declines, with some projections estimate could reach billions in annual losses.
Speaking at the Global Gaming Expo (G2E) conference in Las Vegas this week, Limardo said it was “far and away” the biggest issue he’s heard discussed by gamblers in his eight years working for MGM.
Next steps
Nevada Rep. Dina Titus, whose district includes portions of the Las Vegas Strip, introduced a 100% deduction restoration bill shortly after the OBBB was signed into law. The bill has gained more than a dozen bipartisan co-sponsors but has not received a vote in the House Ways and Means Committee, the first step in the lengthy legislative process.
Ways and Means Committee chair 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 effort to attach the tax deduction language to another House bill failed, and there appear to be dwindling paths to passage before Jan. 1.
The 100% deduction restoration, either as a standalone measure or part of a larger bill, must pass both the full Senate and House before it can pass into law.
Proponents outside Congress say they are encouraged by feedback from members of both parties about the bill, with lawmakers largely agreeing the tax is unfair. The 90% loss was included as a revenue generation tool, not as a political incentive, which gaming stakeholders believe gives the 100% loss restoration more hope of passing Congress.
There are now less than three months before the current deduction change takes effect. In the meantime, major casino operators, including MGM, as well as gaming industry advocates, such as the American Gambling Association, are reaffirming their efforts to passing the bill while acknowledging the difficulties that lie ahead.
“The challenge is the government's currently shut down partisanships at an all-time high,” said AGA senior vice president Chris Cylke during a G2E panel this week. “I don't think anybody can tell you when the government reopens, let alone what the end-of-the-year vehicles are going to look like that may be able to get this fixed attached to it.”
“The message here is we're working hard to try to fix this.”
