A group of lawmakers is working to scratch a new gambling penalty tucked into President Trump’s sweeping tax and spending mega-bill.
The bill signed into law by Mr. Trump on July 4 includes a surprise tax hike dinging gamblers. It was added by Senate Republicans. Now, one of the most powerful House GOP lawmakers is seeking to repeal it.
Rep. Jason Smith, chairman of the House Ways and Means Committee, told The Washington Times he will back legislation to get rid of the newly added tax on gamblers and will forge “a path forward on this issue in the months ahead.”
Professional gamblers warn that the new tax threatens the survival of the gambling industry, which is crucial to the economies of many states.
“For poker, many pros will no longer be able to make it,” said professional poker player Phil Galfond.
The gambling tax was tacked on to the so-called One Big Beautiful Bill by Republicans on the Senate Finance Committee. It was included to help cover the cost of the legislation.
The massive bill slashed taxes on individuals, tipped wages, overtime pay and Social Security benefits for retirees. It also added $325 billion in additional spending for the military and to finance the completion of a wall along the U.S. southern border.
Net spending cuts and tax code changes in the measure amounted to $1.1 trillion in new projected revenue.
The gambling tax is estimated to raise $1.1 billion by cutting the deduction on gambling losses from 100% currently to 90% beginning in 2026.
The change will, in some cases, cut into gamblers’ earnings significantly by ending the 100% write-off of losses. Those who gamble regularly will have to pay taxes in years when they break even or end up with a net loss.
The gambling tax has stirred opposition from House lawmakers, including Mr. Smith, of Missouri, who called it “a mistake.”
There are 13 casinos in Missouri, including two in Mr. Smith’s district.
Mr. Smith and other members of the tax-writing panel recently held a field hearing in Las Vegas.
The powerful chairman signaled the House is working to repeal the tax, which was added after the House version of the legislation was sent to the Senate.
“For those of you concerned about this change, I can tell you that members on both sides of the aisle have heard you, and I know that many members on both sides of the aisle are open to working to address it before it goes into effect on Jan. 1,” Mr. Smith said.
Sens. Jacky Rosen and Catherine Cortez Masto, both Nevada Democrats, co-sponsored a bill to repeal the tax.
Nevada’s casinos reported $31.5 billion in revenue in 2024, according to the Nevada Gaming Control Board. The state’s gaming industry supports more than 386,000 jobs.
“This is going to hurt people who visit casinos and hurt Nevada’s gaming industry more broadly, which supports nearly a third of jobs in our state and generates billions of dollars for the local economy,” Ms. Rosen said when introducing her bill.
The repeal measure in the Senate has the backing of two Republicans, Sens. Ted Cruz of Texas and Bill Hagerty of Tennessee.
Rep. Diana Titus, a Democrat who represents Las Vegas, introduced a similar bill to repeal the tax and keep in place the 100% write-off for gambling losses.
It has the backing of six Democrats and four Republicans.
Ms. Titus said she’s been posting about repealing the tax on her X account and got responses from more than one million social media followers.
“I’ve never gone viral before, but this issue has actually done that,” she said.
Ms. Titus said nearly every state allows some form of gambling or sports betting, and states stand to lose revenue thanks to the tax. She predicted it won’t bring new tax revenue to the Treasury.
“If we don’t do away with the tax, people aren’t going to itemize and pay their taxes. They’ll just figure, to hell with it, I’m not going to turn this in,” she said. “Or, they’ll go gamble offshore or in some black market. We definitely need to get rid of this.”
A spokesperson for the Senate Finance Committee did not respond to an inquiry about the gambling tax from The Washington Times.
Mr. Smith said gamblers made at least one gain in the new tax cut law. The threshold for reporting slot machine winnings to the IRS was raised from $600 to $2,000.
“The gaming industry has a lot to celebrate in the One, Big, Beautiful Bill and has been vocal with their support,” Mr. Smith said.
The American Gaming Association did not respond to an inquiry about the higher gambling tax.