WASHINGTON — Senate Republicans blocked an effort by Sen. Catherine Cortez Masto, D-Nev., to undo a provision tucked into President Donald Trump’s massive tax package that reduces how much gamblers can deduct from their taxable income.
Under the “Big Beautiful Bill Act,” lawmakers approved language that would implement a 90% cap on how much gamblers can deduct of their losses against winnings, down from current law that allows them to deduct their full losses.
For example, if a gambler won $100,000 and lost $100,000, it would result in zero taxable income. However, the new language would only allow the player to deduct $90,000 — meaning they would owe $10,000 in taxes even if they broke even.
In doing so, critics argue it creates what they are calling “phantom income” that essentially requires gamblers to pay taxes on earnings they did not get to keep.
Cortez Masto sought to fix the language through a process known as unanimous consent, which would approve the proposal so long as no senator objected. The Nevada senator asked for unanimous consent on Thursday to pass her Facilitating Useful Loss Limitations to Help Our Unique Service Economy (FULL HOUSE) Act, but that motion was blocked by Sen. Todd Young, R-Ind., who wanted to add carveouts to her proposal.
“It is a shame that we cannot pass this commonsense (bill) because Republicans want to weigh it down with unrelated measures that they voted to support,” Cortez Masto said on the Senate floor. “This is a Republican piece of legislation that is actually causing people to pay taxes on money they lost. It makes no sense. And that’s all this is, is to try to fix it. … So I’m disappointed, but I am not done.”
The gambling tax deduction measure came as a surprise to several Republican senators — but not until after they voted to pass the bill. When asked about the language, many Republicans said they were unaware the provision was included in the 870-page bill.
“If you’re asking me how it got in there, no I don’t know,” said Sen. Chuck Grassley, R-Iowa, who sits on the Senate Finance Committee.
“I was so focused on Medicaid, I wasn’t looking for other reasons to be against the bill. But that would be another one,” Sen. Thom Tillis, R-N.C., who ultimately voted against the full package, said separately.
Cortez Masto cited how the measure would specifically disparage her state of Nevada, home of Las Vegas, one of the most well-known gambling cities in the world.
The Nevada Democrat sought to restore the deduction cap to 100%, which Young wanted to amend on the floor to include a provision that was nixed from the original bill by the Senate parliamentarian. That provision had to do with exempting certain religious institutions from endowment taxes.
Sen. Ron Wyden, D-Ore., rejected that addition, prompting Young to reject Cortez Masto’s bill altogether.
Cortez Masto said she would continue pushing to overturn the gambling tax change in future legislation.
