Ask the Slot Expert: Big, beautiful bill bilks bettors

It was all over the news in Las Vegas a few weeks ago, but it may not have been as big a story on your local news. A provision in the big, beautiful bill (BBB) could cause gamblers to play less in casinos.

Obscurely placed in Section 70114, the new law removes the ability for gamblers to deduct 100% of their losses from their winnings from their income taxes. Starting January 1, 2026, gamblers will only be able to deduct 90% of their losses.

One Big Beautiful Bill: Sports Betters and Gamblers Might Disagree

Here's an example of how this works. When I file my Schedule C, I add up all of my winning sessions and report that number on line 1. I add up all my losing sessions and report that number on line 4. The difference is my gross profit reported on line 5.

Let's say I had a total of $100,000 in winning sessions and $110,000 in losing sessions. (Not a good year.) Before the Tax Cuts and Jobs Act (TCJA) signed into law on December 22, 2017, I could report a gross profit (loss, really) of $10,000 on line 5 and use that loss to offset other income.

The TCJA limited the loss I could deduct to the amount of my winnings. Instead of having the full menu of net results afforded any other business (profit, breakeven, loss), the TCJA gave me the kids menu of just profit and breakeven. The maximum number I could put on line 4 was now $100,000 and the worst result I could report was a breakeven.

I had some losing years after TCJA was passed so I actually paid more in taxes due to the tax cut act.

Under BBB, the amount I can report on line 4 is 90% of $110,000 or $99,000.

Let's look at gross profit's trajectory over the years. My true loss of $10,000 became breakeven and now is a profit of $1,000.

Let's say it's a good year. Winning sessions total $110,000 and losing sessions $100,000. A true of profit of $10,000 (Yippee!).

That's not the situation under BBB. I can put only $90,000 in losses on line 4. My true profit of $10,000 is reported as a phantom profit of $20,000.

What if you're a casual gambler? You will also be able to claim only 90% of your losses, but you're already disadvantaged by having to itemize to claim losses. The limitation probably won't have much effect on most casual gamblers because it's more advantageous for them to take the standard deduction.

Nevada's members of Congress are pushing to restore 100% deductibility, but so far have not been successful despite almost universal support in both houses on both sides of the aisle.

See Gambling tax hike threatens professionals by I. Nelson Rose on this site for his take on this provision.

Will the big, beautiful bill cause you to bet less in the casino?

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