AGA backs bill to restore 100% deduction on gambling losses

The American Gaming Association released a statement Monday backing proposed legislation to restore the 100% deduction for gambling losses.

Earlier Monday, U.S. Rep Dina Titus of Nevada, co-chair of the Congressional Gaming Caucus, introduced the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act that would restore the 100% deduction for gambling losses.

There’s been an outcry from gamblers and lawmakers since the provision to reduce the tax on losses to 90% was included as part of the tax reconciliation bill signed into law by President Trump last week. The provision was estimated to generate about $1.1 billion.

The provision goes into effect in 2026, unless reversed by Congress.

“The American Gaming Association applauds Congresswoman Titus for introducing the FAIR BET Act. We are committed to working with Congresswoman Titus, other congressional leaders, and the Trump Administration to restore the long-standing tax treatment of gaming losses,” the AGA said in a statement.

There are concerns the provision will push gamblers from poker players to sports bettors off share into illegal betting markets.

The AGA had initially been silent about the deduction reduction, but pointed to a letter it sent in May to the Committee on Ways and Means, in which it addressed the issue under a provision that has been in the Internal Revenue Code for more than a half-century. Taxpayers who itemize have been allowed to deduct gambling losses against wins to compute their net taxable income from gaming.

“The Tax Cuts and Jobs Act of 2017 (TCJA) affirmed that this long-standing itemized deduction for gaming losses is not a subsidy for gaming customers,” the letter said. “It is a tool for properly measuring income. It is not only critical to maintain this deduction for taxpayers who itemize, but — as a matter of fairness — Congress should consider allowing for non-itemizers to net their gambling wins and losses for purposes of reporting adjusted gross income. Under current policy, most taxpayers do not itemize and many gaming customers are subject to the mismatch of being taxed on the full amount of their gross gaming wins with no ability to net their losses. As a result, those who are in a losing position at the end of the year are in effect being taxed on income they have not received.”

The AGA thanked the senators for their leadership in ensuring the tax code promotes economic growth, innovation, and reinvestment and shared their tax priorities for the legal and regulated gaming industry.
“The AGA supports restoring or extending many of the reforms achieved in the TCJA, as well as addressing antiquated gaming-tax policies,” the letter said. “The AGA is the premier national trade group representing commercial and tribal casino land-based and online operators, technology equipment manufacturers, suppliers, and other entities affiliated with the gaming industry who contribute billions of dollars in tax revenue.”

The AGA has also called for an increase in the slot tax-reporting threshold; repeal of the sports betting excise tax; maintaining the corporate tax rate; a bonus depreciation extension; repeal of the requirement to capitalize and amortize research and experimental expenditures; allow Sovereign Tribal Nations to utilize Private Activity Bonds; rescind the tax on tips; and maintain deductions for business state and local taxes.

The U.S. gaming industry provides for $329 billion in total economic output (business sales), $53 billion in federal, state, and local taxes, including $13.5 billion in gaming- specific taxes, and 1.8 million jobs generating $104 billion in labor income (wages, salaries, tips, benefits, and other compensation), the AGA said in the letter.

Direct employment in the gaming industry includes nearly 600,000 jobs at casinos and corporate offices, more than 23,000 jobs at U.S.-based gaming-equipment manufacturers, and 89,000 jobs at businesses that serve patrons visiting casinos.