GOP Senators Prevent Reduction of Tax Increase for Gambling Professionals

The recently passed tax and spending bill, known as the "One Big Beautiful Bill" (OBBB), is set to bring significant changes to the U.S. federal tax law. One such change, effective from January 1, 2026, will limit the deduction of gambling losses to 90% of gambling winnings, down from the previous 100% allowance.

This new rule, which affects both casual and professional gamblers, means that even if a gambler breaks even (wins equal to losses), they will still owe taxes on 10% of their gross winnings, creating "phantom income"—income on paper that they did not actually keep.

The provision, estimated to generate over $1.1 billion in federal revenue over 8 years, has sparked controversy. Senators and lawmakers from both parties have expressed concerns and are trying to repeal or amend the provision before it takes effect. A House Ways and Means Committee hearing in Las Vegas highlighted the issue, with some lawmakers regretting its inclusion and discussing the negative impacts on gamblers and the gaming industry.

Professional gamblers and the broader gambling community are alarmed by the new rule because it forces them to pay income tax on money they never netted after losses, worsening their financial outcomes despite breaking even. Notable figures like Phil Galfond, a professional poker player, have voiced their concerns that the change could end professional gambling in the U.S. and hurt casual gamblers as well.

The bill, signed into law last week by President Donald Trump, contains many provisions changing federal programs and the tax code. The gambling tax deduction change was included in the bill's text released on June 16 by Senate Finance Committee Chair Mike Crapo.

Senator Catherine Cortez Masto of Nevada sought unanimous passage of a bill to roll back the change on gambling tax deductions, but was blocked by Republican Senator Todd Young of Indiana. Young would only agree to undo the provision if Democrats accept other provisions in return. Thursday's attempt by Cortez Masto to reverse the provision won't be the last, as she has introduced a bill to restore the full gambling deduction.

In the House, Nevada Democratic Rep. Dina Titus has also introduced a bill attempting to return to the previous standard. The emerging fight over the gambling provision is likely only the beginning of the fallout from the new tax law's impact on the country.

As many lawmakers admit they are only now beginning to fully digest the provisions of the new tax law, the impact of the change in gambling tax deductions could be steep. Individuals may still owe taxes on their remaining losses, even if they have lost all their winnings. The new tax law spans more than 900 pages, and the full implications of the changes are yet to be fully understood.

[1] Congressional Budget Office Report [2] House Ways and Means Committee Hearing Transcript [3] Senate Finance Committee Text of the Bill [4] IRS Guidance on Gambling Tax Deductions [5] Schedule A Instructions

The gambling industry, particularly in Vegas and casino-gaming venues across the nation, is closely following the recent changes in policy-and-legislation due to the alteration of the gambling tax deduction rule.
In wake of the One Big Beautiful Bill (OBBB), casino-personalities and finance experts are researching the implications of the new 90% deduction cap on gambling losses, a change from the previous 100% allowance.
With the new rule, there's an increasing concern in the fintech sector about the potential impact on the casino-and-gambling market, as many professional gamblers might face financial hardship due to the generation of "phantom income."
Various lotteries and casino-games' operators and players are keeping a close eye on policy developments, as they may be affected by the outcome of the ongoing disputes in Congress and the Senate.
General-news outlets have reported a surge in interest in casino-culture and gambling trends, as the changes in policy-and-legislation have captured the attention of the broader public.
Despite the ongoing controversies, the battle over the gambling provision in the OBBB is far from over, as several lawmakers from both parties are keen on addressing this issue amid ongoing discussions about taxes, finance, and politics.