In a packed Las Vegas event room just steps from the slot machines, one of the most powerful Republicans in Congress made a firm promise that sent ripples through the gaming world. House Ways and Means Committee Chairman Jason Smith (R-MO) said he plans to reverse a tax code tweak that has gamblers — and casinos — up in arms.
The new rule, quietly tucked into legislation earlier this year, sliced how much gamblers can write off on their taxes. Previously, they could deduct 100% of their losses against winnings. Now, it’s capped at 90%. But not for long, Smith told casino bosses and industry reps at a Thursday night roundtable.
A Tax Change Few Saw Coming — And Fewer Want
The 90% cap wasn’t debated at length. It appeared, seemingly overnight, buried in over 1,000 pages of a sprawling bill President Trump signed just weeks ago.
Many gamblers didn’t even realise the rule had changed. Casinos, however, noticed quickly.
“It hurts our most loyal players,” said one executive, speaking on background. “The high rollers. The ones who bring the real revenue.”
Smith didn’t argue. He met privately Thursday night with three top casino CEOs, including MGM’s Bill Hornbuckle, Caesars’ Tom Reeg, and Wynn Resorts’ Craig Billings.
By Friday morning, he’d made up his mind.
Smith: “We’re Going Back to 100%”
The hearing, held under the neon buzz of the Strip, wasn’t your average policy talk. It was a “field hearing,” part of Smith’s effort to spotlight the impacts of what Republicans are calling the “One Big Beautiful Bill.”
But it quickly became a forum on gambling taxes.
Smith didn’t mince words.
“This is something we’re going to fix — and we’re going to fix it before the end of the year,” he said. “Gamblers should be able to deduct every dollar they lose, plain and simple.”
That drew audible approval from the room, where several industry advocates sat alongside workers from Nevada’s service-heavy economy.
A moment later, Smith added: “We’ve heard you loud and clear.”
Not Just About Gamblers — Tips and Taxes Take Centre Stage
The hearing wasn’t only about gamblers. A big chunk of the discussion focused on service workers — servers, drivers, bartenders — and how tips are taxed.
Smith and his committee heard personal stories:
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A restaurant server shared how inconsistent tips hurt her budgeting.
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A DoorDash driver spoke about the difficulty of reporting cash tips.
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A valet at a casino said he often gets penalised by payroll taxes despite giving excellent service.
Smith pointed to a Trump campaign promise made in Vegas: eliminate federal income taxes on tips. “This city runs on tips,” he said.
Casinos Quietly Pushed for the Fix
Behind the scenes, casino executives have lobbied hard to get the deduction rule changed back.
“They don’t want to spook their VIPs,” said one industry insider. “Those players bring millions — and they notice stuff like this.”
A quiet but coordinated campaign emerged after the bill passed. Meetings with lawmakers. Phone calls to staffers. Position papers.
By Thursday, it was clear their message had landed.
And by Friday, it had stuck.
What the Numbers Say
To get a sense of what’s at stake, here’s a look at how the deduction change affects gamblers:
| Winnings | Losses | Deductible Under Old Rule | Deductible Under New Rule |
|---|---|---|---|
| $100,000 | $90,000 | $90,000 | $81,000 |
| $250,000 | $230,000 | $230,000 | $207,000 |
| $1,000,000 | $950,000 | $950,000 | $855,000 |
That 10% gap doesn’t sound like much — until you apply it to high-stakes gambling. For many professional gamblers, that’s the difference between a profitable year and a loss on paper.
“This isn’t just about the whales,” said a financial advisor in attendance. “Even small-time players can feel it.”
What Happens Next?
Smith’s pledge isn’t law yet. It needs legislation — and likely a vote before year’s end.
But insiders say it has a good shot. There’s bipartisan discomfort with penalising recreational and professional gamblers. And in a city where casinos are king, politicians tend to listen.
Still, some tax watchdogs have raised eyebrows.
“Why do gamblers get a full deduction but not other professions with risky incomes?” asked a policy analyst at the Urban-Brookings Tax Policy Center. “It’s a question worth asking.”
But in Vegas this week, it wasn’t a question many wanted to ask.
The mood, at least for now, is one of cautious relief. As one CEO reportedly told Smith on Thursday night, “We don’t want trouble. We just want things back the way they were.”
