This week in Washington, D.C., Congress returned with numerous unresolved issues, including a pivotal bill addressing the taxation of gambling losses, which remains low on the legislative agenda. The proposal, aimed at reinstating full tax deductions for gambling losses, enjoys bipartisan support in both the House and Senate. Yet, it is making little headway as the legislative clock ticks down.
The push to reinstate full deductions emerged after a provision in the comprehensive One Big Beautiful Bill imposed a 90% limitation. Starting in 2025, individuals who itemize deductions will face restrictions on offsetting their gambling winnings with equivalent losses. Analysts warn this could result in bettors being taxed on income they never actually accrued. There are stories circulating among lawmakers about gamblers potentially facing tax liabilities on significant sums, despite breaking even overall.
Representatives Dina Titus of Nevada and Andy Barr of Kentucky have introduced House bills to repeal this change, while a similar measure languishes in the Senate. Although committee leaders have expressed their support, no vote has been scheduled in Congress. The prolonged government shutdown earlier this fall stalled nearly all legislative momentum, and insiders caution that competing year-end deadlines leave scant room for isolated tax solutions.
The gambling industry braces for a potential downturn if the deduction limits remain. Proponents of the full deduction argue that its restoration is crucial for the financial health of casinos and sportsbooks heavily reliant on high-stakes players. Industry groups have warned legislators that tighter regulations might deter big spenders, thus affecting the liquidity of operators and diminishing their capacity for handling substantial bets. Some executives suggest that affected players might migrate to offshore platforms where tax reporting isn’t required.
This tax uncertainty arrives at a particularly challenging time for the gaming sector. Major players like FanDuel and DraftKings are preparing to launch prediction markets with distinct tax treatments compared to traditional betting offerings. Experts speculate these new tax frameworks might lure customers away from conventional sports betting, exacerbating the negative impact of the deduction cap.
While more lawmakers are rallying behind the repeal effort, achieving its passage remains a daunting task. Some politicians admit they were unaware of the deduction alteration when endorsing the larger bill and are now considering reversing it. Nevertheless, numerous hurdles persist. Attempts to attach the fix to broader legislation, such as the annual defense spending bill, have already been unsuccessful this year.
Should Congress fail to act before its session concludes, the new regulations will take effect as scheduled. Financial analysts monitoring the situation predict that the resulting tax burden on frequent gamblers could lead to a significant reduction in activity for casinos, sportsbooks, and associated businesses, potentially amounting to billions of dollars in losses in 2025.
Garry Sputnim is a seasoned journalist and storyteller with over a decade of experience in the trenches of global news. With a keen eye for uncovering stories that resonate, Alex has reported from over 30 countries, bringing light to untold narratives and the human faces behind the headlines. Specializing in investigative journalism, Garry has a knack for technology and social justice issues, weaving compelling narratives that bridge tech and humanity. Outside the newsroom, Garry is an avid rock climber and podcast host, exploring stories of resilience and innovation.
