Senate Rejects Effort to Reverse Gambling Tax Law Changes
A recent amendment within a comprehensive tax and spending bill, dubbed the “big beautiful bill,” has ignited controversy among professional gamblers and Democratic lawmakers. This amendment, signed into law last week, alters the tax deductibility of gambling losses, sparking significant opposition.
The contentious change reduces the tax deductibility of gambling losses from 100% to 90%, effective in 2026. This means high-stakes gamblers will see a considerable reduction in their net winnings, potentially even resulting in tax liabilities exceeding their actual profits.
The amendment, buried within the 900-page bill, appears to have eluded the attention of many legislators before its passage. Senator Catherine Cortez Masto highlighted this oversight, stating that numerous Republicans and Democrats were unaware of the provision during the legislative process.
Senator Cortez Masto, along with Nevada Representative Dina Titus, spearheaded an unsuccessful Senate attempt to repeal the unpopular gambling tax provision. Representative Titus, in a July 7th statement, emphasized that her proposed “My Fair Bet Act” aims to reinstate full deductibility for gambling losses, preventing taxation on unrealized winnings.
Bipartisan Opposition and Political Maneuvering
While Democrats unanimously opposed the original bill, the effort to overturn the gambling tax amendment failed due to a lack of sufficient Republican support. Although three Republican senators ultimately voted against the bill, this was insufficient to prevent its passage. The subsequent attempt to reverse the amendment also faced significant Republican resistance.
The proposed change only affects high-stakes gamblers; winnings remain fully untaxed. However, the reduction in the deductibility of losses has caused considerable unease. Senator Ron Wyden noted the apparent lack of awareness among some Republican senators regarding the policy’s implications.
Uncertainty and Future Prospects
Despite some Republicans expressing sympathy for the counter-bill, a reversal of the gambling tax law appears contingent upon further concessions from Democrats. The 2026 effective date of the new law suggests further political maneuvering and potential legislative battles lie ahead. The lack of Republican unity on this issue underscores the ongoing uncertainty surrounding the future of gambling taxation in the United States.
