Senate Republicans have thwarted a push by Senate Democrats to roll back a new provision in tax law that limits gambling loss deductions. The move, which will take effect in 2026, has raised concerns among professional gamblers and some lawmakers about its potential negative impact on both large-scale gamblers and casual players.
Under the revised tax law, individuals will only be able to deduct 90% of their gambling losses, capped at the amount of their winnings. This marks a shift from the previous rule, which allowed for the full deduction of losses up to the amount won. The tax change, while not affecting casual gamblers as severely, could create significant issues for professional players, especially those who itemize their deductions.
A Change That Hits High-Stakes Gamblers Hard
The new rule could cause substantial financial strain for gamblers who frequently engage in large bets. To understand the difference, imagine a scenario where a gambler wins $100,000 but loses an identical amount. Under the old rule, they could deduct the entire $100,000 in losses, leaving them with no tax liability. However, under the new rule, the gambler would only be able to deduct $90,000 of those losses and would still owe taxes on the remaining $10,000.
As Phil Galfond, a professional poker player, pointed out on social media ahead of the bill’s final passage, this change could be disastrous for serious gamblers. “This new amendment to the One Big Beautiful Bill Act would end professional gambling in the U.S. and hurt casual gamblers, too,” Galfond stated.
The provision was introduced into the bill released by Senate Finance Committee Chair Mike Crapo on June 16. However, many senators, including Republicans, have since claimed they were unaware of the gambling provision until shortly before the bill was passed. This has led to confusion and frustration among lawmakers and those in the gambling industry.
Senators Express Concerns Over Process and Impact
Senator Ron Wyden, the top Democrat on the Senate Finance Committee, voiced his frustration with the rushed process, which he believes led to unintended consequences. “Now I see Republican senators walking all over the Capitol saying they didn’t even know anything about this policy,” Wyden remarked. He added that the haste behind the bill’s passage could cause problems for people back home, particularly those who rely on gambling as a significant part of their income.
Senator Cortez Masto of Nevada, who has been vocal about the need to reverse the new provision, pushed for a bill to reinstate the previous deduction policy. Her bill, which has garnered bipartisan support, aims to restore the full deduction and will undergo committee review before proceeding. The House of Representatives has also seen similar attempts, with Nevada Representative Dina Titus introducing a bill in the House to restore the earlier tax deduction standard.
The Revenue Impact and Political Backdrop
Republicans have defended the gambling provision, arguing that it was a necessary part of the procedural process used to pass the broader tax and spending cuts package. The provision is expected to raise over $1.1 billion in tax revenue over the next eight years. In total, the bill, which includes both tax breaks and spending cuts, is projected to increase the deficit by nearly $3.3 trillion from 2025 to 2034, according to the Congressional Budget Office.
However, the focus on gambling tax deductions raises questions about the broader priorities in this legislation. Critics argue that this is just one example of policies being hidden within large-scale bills without proper vetting or consideration. While the new rule is expected to generate significant revenue, it is clear that the issue is far from settled in Congress.
Republican Objections and Possible Future Negotiations
Republican Senator Mike Young of Indiana, who objected to Cortez Masto’s attempt to reverse the tax change, has voiced support for the broader bill but is unwilling to back down without concessions. “I strongly support the underlying bill, but will have to object unless you can agree to my request,” Young said during the Senate debate.
This political tug-of-war reflects the complexity of tax reform and the challenges lawmakers face when trying to balance the interests of different groups. With negotiations ongoing, the issue is likely to remain in the spotlight as both parties continue to argue over the future of tax policy and its impact on various sectors.
In Nevada, home to a large number of professional gamblers, the debate is particularly heated, with local lawmakers keen to protect the livelihoods of those in the gambling industry. With no immediate resolution in sight, it is clear that this issue will continue to generate significant debate in the months leading up to the law’s implementation in 2026.
