Will the cap on gambling loss reduction be repealed?

The incoming 2025 chairs of key tax committees prioritize expiring TCJA individual provisions. Following the 2024 elections, Representative Jason Smith (R-MO) was named Chairman of the House Ways and Means Committee for the 119th Congress in January 2025 ^[4]. Chairman Smith's opening statements emphasized preventing tax increases on families and small businesses, and making the 2017 tax relief permanent ^[5]. Representative Mike Kelly (R-PA) will also chair the Ways and Means Subcommittee on Tax ^[2]. In the Senate, Senator Mike Crapo (R-ID) was announced as Chairman of the Senate Finance Committee in January 2025 ^[3]. While his specific 2025 legislative agenda regarding the Tax Cuts and Jobs Act (TCJA)'s expiring individual provisions was not extensively detailed in general committee announcements ^[6], extending or modifying these provisions is a high-priority item for the committee.

General TCJA discussions omit specific provisions like wagering loss limitations. Both committee chairs are expected to debate the extension or modification of TCJA provisions impacting individual income tax rates, the standard deduction, and certain family tax credits. However, no explicit public statements were found from Chairman Jason Smith, Chairman Mike Crapo, or key staff like Mike Kelly regarding the specific limitation on wagering losses under Section 165(d) of the Internal Revenue Code [1-10]. Their communicated policy priorities primarily concern broader tax relief, economic growth, and the permanency of TCJA provisions affecting families and businesses, rather than highly specific deductions or limitations such as those related to wagering losses.

Specific lobbying data for Q4 2024 and Q1 2025 is not yet public. Lobbying disclosure forms are filed quarterly, typically after the close of the reporting period. However, trends from Q3 2024 and earlier quarters indicate consistent and substantial lobbying efforts by the American Gaming Association (AGA) and other key industry entities such as MGM Resorts International, explicitly addressing tax-related legislation and targeting tax-writing committees ^[4].

The American Gaming Association and MGM reported significant Q3 2024 spending. For this period, the American Gaming Association reported $300,000 in lobbying expenses. Their efforts encompassed "issues related to sports betting" and "H.R. 7024, Tax Relief for American Families and Workers Act of 2024," a bill dealing with aspects of the Tax Cuts and Jobs Act (TCJA) of 2017. The AGA specifically engaged with the House Ways and Means Committee and the Senate Finance Committee, both primary tax-writing bodies ^[1]. Similarly, MGM Resorts International disclosed $210,000 for Q3 2024, addressing "H.R.7024, Tax Relief for American Families and Workers Act of 2024" and "Wagering and taxation issues relevant to the gaming industry," also targeting the House Ways and Means and Senate Finance Committees ^[2].

The gaming industry consistently lobbies on tax and wagering policies. This sustained focus on tax and wagering matters, including legislation related to the TCJA, underscores the industry's engagement with tax policy that could influence gambling loss reduction rules. The broader Casinos/Gambling industry reported a total of $14,940,000 in lobbying spending for 2024 as of October 24, 2024, with "Taxes" and "Gambling/Casinos/Gaming" identified as key issues ^[3].

Repealing the gambling loss deduction cap would reduce federal revenues. Analysis from the Joint Committee on Taxation (JCT) released in 2025 projects that repealing the current cap on gambling loss deductions, as proposed in legislation like H.R. 82, "The Tax Cut And Jobs Act Of 2025," would decrease federal revenues by $1.5 billion over the ten-year period spanning fiscal years 2025 to 2035. This estimate specifically reflects the fiscal impact of eliminating the limitation on the deduction for gambling losses, identified as Section 1106 in the proposed bills ^[1].

The gambling loss deduction cap repeal has a minor fiscal impact compared to other expiring Tax Cuts and Jobs Act (TCJA) provisions. The JCT's estimates indicate that extending other significant TCJA provisions would result in substantially larger revenue losses. For example, extending the individual income tax provisions (Section 1001) is projected to cost $3,066.0 billion over 2025-2035 ^[1]. Other notable costs include extending the limitation on the deduction for State and local taxes (SALT) (Section 1002) at $346.9 billion, and extending 100-percent bonus depreciation (Section 1101) at $331.0 billion ^[1]. Additionally, extending the increased estate and gift tax exemption (Section 1003) is estimated to cost $138.8 billion, and extending the research and experimental expenditures amortization (Section 1103) is projected at $134.1 billion ^[1]. These figures underscore that repealing the gambling loss deduction cap represents a comparatively small fiscal consideration within the broader debate surrounding expiring TCJA provisions ^[1].

Nevada committee members actively shape federal gaming tax policy. Representative Steven Horsford (D-NV) and Senator Catherine Cortez Masto (D-NV), particularly those representing Nevada, have actively engaged in federal gaming tax policy during the 118th and 119th Congresses. Both have championed legislation known as the "FULL HOUSE Act," which aims to repeal the cap on gambling loss deductions ^[1].

Representative Horsford champions gaming tax reform on Ways and Means. As a member of the House Ways and Means Committee ^[2], Representative Steven Horsford (D-NV) co-introduced the bipartisan "FULL HOUSE Act" in the 118th Congress ^[1]. Representing Nevada's 4th Congressional District, which has a significant casino and gaming industry ^[1], he has advocated for the bill's inclusion in House spending legislation ^[4]. The bill seeks to restore the full deduction for gaming losses ^[1].

Senator Cortez Masto pushes for full wagering loss deductions. On the Senate Finance Committee ^[3], Senator Catherine Cortez Masto (D-NV) co-led the bipartisan "FULL HOUSE Act" in the Senate with Senator Ted Cruz (R-TX) during the 118th Congress, with the goal of fully restoring the wagering loss deduction ^[5]. She has voiced criticism regarding the failure to address limitations on wagering loss deductions in earlier tax legislation ^[5]. Furthermore, in the 119th Congress, Senator Cortez Masto co-signed a letter to the Commodity Futures Trading Commission (CFTC) concerning sports gaming ^[6].

Non-partisan groups favor reconciliation for addressing TCJA expirations. By June 2025, a party-line reconciliation bill is largely considered the most probable legislative vehicle for addressing the expiring provisions of the Tax Cuts and Jobs Act (TCJA) ^[1]. This approach would allow the controlling party to extend or make permanent many expiring tax provisions with a simple majority vote, thereby circumventing the Senate's 60-vote filibuster requirement ^[1]. Organizations such as the Tax Foundation, the Bipartisan Policy Center, and the Committee for a Responsible Federal Budget frequently highlight budget reconciliation as the most probable path, particularly if one party controls both the presidency and Congress ^[1].

Reconciliation enables significant action beyond temporary extenders. While comprehensive bipartisan reform is often considered an ideal solution, it faces significant political challenges given current dynamics ^[2]. A simple 'extenders' package, which would only continue current law for a short period, is also an option but is deemed less comprehensive for establishing long-term tax policy ^[2]. Republican legislative proposals, such as the House GOP's "Tax Cuts That Work Act," exemplify a comprehensive, party-line approach aimed at making many TCJA provisions permanent, which would typically rely on a reconciliation vehicle ^[3]. Consequently, reconciliation is viewed as the most likely avenue for substantial action on the TCJA expirations.