The new gambling loss tax cap faces Nevada pushback, but data suggests it impacts only high-rollers, not tourists
A gambling provision in the recently enacted One Big Beautiful Bill (OBBB) is sparking backlash from Nevada lawmakers and the gambling industry. Starting January 1, 2026, gamblers can only deduct 90% of verified losses against winnings.
Under current tax rules, gamblers can fully deduct documented losses against their winnings, treating gambling as a net-income activity. The new limit, however, means a bettor who wins $10,000 and loses $10,000 could only deduct $9,000, resulting in taxes on $1,000 of non-existent profit.
Rep. Dina Titus (D-NV) warned at a recent town hall that the new gambling tax cap "will hurt players, operators, and our tourism economy." Joined by experts including tax specialist Russell Fox, Nevada Resorts Association President Virginia Valentine, and former gaming regulator Becky Harris, Titus highlighted the provision's potential to erode tax compliance and visitor spending, while Harris stressed the risk of job losses amid fierce competition from online betting platforms.
Advocates for the new 90% cap on deducting gambling losses argue it curbs abuse and aligns gambling deductions with other hobby-related expenses. Despite concerns about its impact on Nevada’s tourism-driven economy, the cap is unlikely to deter most visitors. Approximately 99% of gamblers wager amounts below IRS reporting thresholds, such as $1,200 for slots or $600 for other games, which trigger Form W-2G issuance. These casual bettors, who form the vast majority of Las Vegas tourists and typically gamble small stakes recreationally, face minimal tax consequences from the cap. Their winnings are often too small to report, or their net losses already exceed winnings sufficiently to offset taxes, even with the reduced deduction. Thus, the policy primarily affects a small group of high-rollers, leaving Nevada’s broader appeal as an entertainment hub unaffected.
Introduced by Senate Republicans during final negotiations, the cap is expected to generate $1.1 billion in revenue over the coming years, offsetting other tax cuts in the 900-page bill, including expanded child tax credits.
Rep. Titus, co-chair of the Congressional Gaming Caucus, introduced the FAIR BET Act to restore the full deduction for gambling losses, gaining 10 bipartisan cosponsors. Titus argues the Act ensures fairness for all gamblers. Despite industry backlash, Republicans like Rep. Mark Amodei (R-NV) defend the cap as pro-growth, blocking repeal efforts.
Rep. Titus and fellow Nevada Democrats, frequently critical and at odds with the Republican Majority and President Trump, struggle to have their proposals heard. A stronger partnership with the majority could elevate Nevada’s influence, but for now, their concerns are overshadowed by partisan divides and dismissed.
