Tax Law Sparks Alarm Among Professional Gamblers
A recent Senate move to reverse a controversial cap on gambling loss deductions has stalled after Republican opposition. Nevada Senator Catherine Cortez Masto attempted to gain unanimous consent for legislation that would restore full tax deductions for gambling losses. However, Republican Senator Todd Young of Indiana objected, halting the bill’s progress and indicating he would consider supporting it only in exchange for other legislative provisions.
New Law Limits Gambling Loss Deductions
The disputed tax change stems from the recently enacted One Big Beautiful Bill Act—a sweeping $3.3 trillion tax and spending package supported by the American Gaming Association and signed by former President Donald Trump. Among the many provisions, the law includes a cap that reduces the deduction of gambling losses from 100% to 90% of a gambler’s winnings, beginning in 2026.
Under the previous rule, gamblers could deduct the full amount of their losses, provided they did not exceed their winnings. The new law, however, means even gamblers who break even could owe taxes. For example, a player who wins and loses $100,000 in the same year would only be able to deduct $90,000, leaving $10,000 classified as taxable income.
Industry Voices Raise Red Flags
Professional poker player Phil Galfond criticized the policy change online, warning that it could “end professional gambling in the U.S.” and adversely affect casual players. Many gambling professionals have echoed concerns, saying the deduction cap creates financial risk even for players who break even.
Lawmakers Cite Process Concerns
Several lawmakers expressed frustration with how the new rule was introduced. Senator Cortez Masto noted that many legislators, on both sides of the aisle, were unaware of the provision before the final vote. Senate Finance Committee Chair Mike Crapo included the rule just days before the June 16 vote, leaving little time for review.
Senator Ron Wyden, the committee’s ranking Democrat, criticized the rushed process: “When you rush a process like this … you risk consequences for people back home,” he said.
The provision is expected to generate approximately $1.1 billion in federal revenue over the next eight years, according to estimates from the Joint Committee on Taxation.
Efforts to Reverse the Policy Continue
Despite the setback, Cortez Masto is not backing down. She has introduced a separate bipartisan bill to fully restore the deduction for gambling losses. The measure is expected to go through the committee process. Meanwhile, in the House of Representatives, Nevada Democrat Dina Titus is championing a similar version aimed at reversing the rule.
Supporters of the fix argue that restoring full deductions is essential to preserve fairness for gamblers and prevent financial hardship for both professionals and recreational players.
