Legislation that upset much of the gambling industry could drive several hundred million dollars in benefits for Las Vegas, Nevada's biggest casino operators.
Key takeaways
- Major operators see a tax windfall: MGM and Caesars expect over $100 million each in benefits from the One Big Beautiful Bill (OBBB), driven by reduced tax liabilities.
- Industry alarm over deduction cut: The OBBB’s gambling loss deduction reductions from 100% to 90% sparked concern among gamblers and stakeholders fearing long-term damage.
- Bipartisan repeal efforts grow: Casino CEOs and lawmakers from both parties are pushing to restore the 100% deduction before the change takes effect on Jan. 1, 2026.
Executives from MGM and Caesars said this week the One Big Beautiful Bill could generate more than $100 million in financial benefits for their respective companies. Speaking during each company’s recent earnings calls, leaders from the two largest casino operators on the Vegas Strip saw the law as a net gain to their bottom lines.
Caesars CEO Tom Reeg said the bill would mean $80 to $100 million less in cash taxes than the company projected before it was signed into law last month. Reeg said that would be enough to cover cash flow losses from lower-than-average second and third financial results from Las Vegas.
MGM Chief Financial Officer Jonathan Halkyard said during this week’s earnings call presentation his company’s tax forecast improved from a liability of around $100 million to a positive refund of $100 million.
“It’s a pretty meaningful change,” Halkyayrd said.
Bettors fears
The executives’ comments come as the OBBB’s gambling winning tax deduction changes alarmed gamblers and other industry stakeholders.
The bill lowers deductions on gambling winnings from 100% of losses to 90%. A hypothetical gambler who itemizes their returns that won $100,000 and lost $100,000 in 2025 wouldn't have to pay taxes on the winnings. In 2026, that same gambler could only deduct $90,000 in losses against the $100,000, meaning they'd need to pay taxes on $10,000 in earnings that didn’t generate a profit.
Professional poker players, sports bettors and other high-profile gamblers took to social media, saying the tax change would force them to leave the industry or turn to untaxed alternatives. Though it only directly impacts the comparatively small percentage of gamblers who itemize their tax returns, stakeholders fear the change could have a deleterious impact on the legal industry as a whole.
The American Gaming Association praised the bill overall, including a provision that eliminates taxes on tipped workers, who make up a significant portion of the roughly 1 million employees working in U.S. casinos. The AGA also lauded the slot winning tax increase reporting threshold from $1,200 to $2,000, a long-time priority.
Gaming analysts were unclear if the OBBB’s tax code changes impact slot reporting thresholds. MGM CEO Bill Hornbuckle said during this week’s earnings call he believed it had increased the level where a slot operator must file a gaming tax form.
As major gaming operators laud many of these changes, these have been overshadowed by the tax deduction decreases, an unpopular change the public and gaming companies are increasingly aware of.
“Obviously, the tax deduction limitation is impactful,” Hornbuckle said during the MGM earnings call, “and in particular, we think about it impacting VIP players and some of the professional players who bounce around a variety of properties.”
Repeal efforts underway
These companies joined the AGA and members of both parties in working to restore the 100% deduction.
Democratic Nevada Rep. Dina Titus, whose district includes the Strip's south end, introduced legislation to restore the 100% deduction days after the OBBB passed. It's since gained 10 co-sponsors, including members of both parties. Republican Rep. Andy Barr of Kentucky introduced similar legislation a few weeks later.
Hornbuckle said he, Caesars’ Reeg and Wynn CEO Craig Billings met with Missouri Rep. Jason Smith last week in Vegas to discuss restoring the deduction. Smith, who chairs the House committee overseeing the bill, said during a public hearing last week after meeting with the CEOs he would work to return the 100% threshold.
Despite growing bipartisan support, the legislation’s passage is far from certain.
An initial attempt to pass companion legislation through the Senate via unanimous consent was rejected by Republican Indiana Sen. Todd Young. The bill must still pass the Senate as well as the House.
The House is also not set to return to regular business until September, giving less than four months to repeal the 90% deduction before it takes effect Jan. 1, 2026. It's also one of dozens of potential changes to the OBBB under consideration in a closely divided Congress.
Bottom line
Early indications from lawmakers in both parties and chambers is an openness to consider the change. In either scenario, the OBBB still includes significant alterations the gaming industry’s largest companies favored.
