Trump's 'Big, Beautiful Bill' Threatens Gamblers: Key Details

Understanding the Gambling Tax Provision in the New Tax Bill

The recent passage of a massive tax and spending cuts plan by Congress has sparked controversy, particularly due to an unexpected gambling tax provision included in the approximately 1,000-page bill. This provision, which reduces the tax deduction for gambling losses from 100% to 90%, has raised concerns among both Republicans and Democrats.

What Does the Gambling Tax Provision Do?

One of the key components of the bill was the extension of expiring tax cuts from President Trump’s 2017 tax law. However, the legislation also introduced several other changes, including the reduction in the tax deduction for gambling losses. The new rule will take effect at the start of next year unless Congress takes action to change it.

Some GOP senators have downplayed the impact of this change on their constituents, but many have expressed frustration over the speed with which the bill was passed. Senator Ron Johnson (R-Wis.) highlighted his concerns about the lack of discussion on various provisions before the bill was finalized.

Who Is Affected?

Experts suggest that the measure could significantly affect professional gamblers. Adam Hoffer, director of excise tax policy at the Tax Foundation, explained that while the provision may not impact the general population, it could have a substantial effect on casino operators and professional gamblers.

For example, consider a professional gambler who spends $1 million a year on poker tournaments and wins the same amount. Previously, they would not owe any net income because their expenses were fully deductible. Under the new provision, they can only deduct $900,000, resulting in a higher tax liability.

Additionally, there are concerns that this legislation could harm the growing sports betting industry and encourage offshore gambling.

How Did It Get in the Bill?

The provision found its way into the bill due to the strict rules governing the budget reconciliation process used by Republicans. This process allowed the tax bill to pass without Democratic support in the Senate, bypassing the usual 60-vote threshold.

According to a spokesperson for the Senate’s chief tax writing committee, every provision from the 2017 tax law needed to be modified to create a budgetary effect. As a result, the gambling loss provision was adjusted to 90%.

What Will It Save?

The Joint Committee on Taxation estimates that the provision could generate around $1.1 billion in revenue over the next decade. However, experts note that the overall package is projected to add more than $3 trillion to the nation’s deficits over the same period.

The new law includes significant changes that could lead to hundreds of billions in reduced spending for programs like Medicaid and the Supplemental Nutrition Assistance Program. It also introduces new restrictions for student loan borrowers and alters the funding for the Consumer Financial Protection Bureau.

Lucy Dadayan, a principal research associate with the Urban-Brookings Tax Policy Center, stated that the tax burden does not fall directly on the gambling industry, but the reduced profitability for players could dampen demand and push gamblers toward unregulated markets.

Will Congress Undo It?

Some Democrats have raised alarms about the measure, with Senator Catherine Cortez Masto (D-Nev.) attempting to undo it earlier this month. She warned that the provision could harm Nevada’s gaming industry by disincentivizing gamblers.

The Senate Finance Committee indicated that Chairman Mike Crapo (R-Idaho) is open to receiving feedback from stakeholders and learning more about industry reporting and compliance. However, no concerns were raised about lowering the threshold during previous discussions.

Senator Ron Wyden (Ore.), the top Democrat on the Finance Committee, emphasized the importance of the issue for Cortez Masto’s constituents. He criticized the Republican approach, arguing that they caused economic damage to Nevada by not consulting with anyone before rushing the bill through.