Gaming Sector Experiences Mixed Success Following Implementation of Substantial Legislative Change
The One Big Beautiful Bill (OBBB), passed in the United States Congress, is set to bring significant changes to the taxation of gambling activities for professional gamblers and casinos like MGM Resorts and Caesars Entertainment. With Congress not returning until September, there is limited time before the changes take effect in January 2026.
The heart of the matter lies in the reduction of the allowable deduction for gambling losses from 100% to 90% of gambling winnings. This means that even if a gambler breaks even overall, they will owe taxes on 10% of the amount won, effectively increasing taxable income for many gamblers.
For casinos, this indirectly impacts their rewards programs. Under current tax law, gamblers could deduct losses against winnings fully, making rewards points and similar benefits less taxable or impactful. However, with OBBB's changes, the decreased deduction limits may diminish the attractiveness of casino rewards since players might owe taxes even when not net winning.
The bill also restored and expanded various business tax provisions such as the restoration of 100% bonus depreciation on qualified property from 2025 through 2034. This could help casinos with capital investments like equipment or improvements, although these are not specific to gambling deductions.
There was initial confusion about whether OBBB increased the slot machine win tax reporting threshold from $1,200 to $2,000. The American Gaming Association interpreted that the threshold was raised to $2,000, but tax experts in Las Vegas have said that the threshold was not impacted by the bill.
In response to the changes, Rep. Dina Titus (D-NV) introduced legislation to restore the full 100% deduction, gaining bipartisan backing. The outcome of this legislation will be closely watched as it could potentially mitigate the impact of the OBBB changes for professional gamblers and casinos alike.
- Despite the potential benefits from the restoration of 100% bonus depreciation on qualified property for casinos, the reduced allowable deduction for gambling losses from 100% to 90% of gambling winnings could significantly affect the attractiveness of casino rewards programs.
- The changes in the taxation of gambling activities under the One Big Beautiful Bill (OBBB) could lead to increased taxable income for many professional gamblers, even if they break even overall, due to the 10% tax on winnings that previously could be deducted fully from their losses.
