Gamblers Served a Crapo Tax Sandwich, Bipartisan Bill Seeks To Trash It

President Trump’s “Big Beautiful Bill” contained a poison pill for gamblers and the gaming industry. The bill included an amendment that limits the tax deductibility of gambling losses to 90 percent of winnings, starting in 2026. This is a change from the previous rule, which allowed a 100% deduction of losses up to the amount of winnings.

Under the new law, a gambler who wins $100,000 and loses $100,000 in the same year could still be required to pay taxes on $10,000. This change is expected to hit professional gamblers hardest, as it could result in them owing taxes on “income” they didn’t actually make. Recreational players could also higher tax liabilities as both professional and recreational gamblers are taxed on a $1200 jackpot–an amount that not adjusted for inflation since it was implemented in 1977.

Senator Mike Crapo (R-UT) served gamblers his Crapo sandwich when he inserted this tax amendment into Trump’s signature piece of legislation. Crapo, a member of The Church of Jesus Christ of Latter-Day Saints, which is opposed to gambling in any form, has been a critic of gambling for decades and played a role in drafting a state constitutional amendment prohibiting most casino-style gambling in Idaho.

This change is also expected to hit Nevada’s gaming industry the hardest.

Reason reports:

The stakes are also existential for states invested in the gaming industry, like Nevada, where gambling taxes fund around 35% of the state’s budget and where the industry supports around 27% of the state’s workforce. Nationwide, the $330 billion gaming industry directly employs around 700,000 people and supports a total of 1.8 million jobs, according to industry data. All of that could be threatened as gamblers inevitably seek out alternatives to avoid the new tax.

Representative Dina Titus (D-NV) was the first to introduce legislation to repeal Crapo’s tax hike and has earned bipartisan support. The Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act would restore the 100 percent deduction.

Reps. Ro Khanna (D-CA) and Troy E. Nehls (R-TX) quickly signed onto the legislation and Khanna warned that “Republicans just passed legislation to kneecap sports and gambling in America.” Chairman of the House Way and Means Committee Jason Smith (R-MO) is also committed to repealing the Crapo Tax.

Yet, the kneecapping remains on the horizon as Titus warns that the legislation may be delayed until next year as the repeal goes through the appropriations process.

At a town hall in Vegas last week, Titus said, “We’re looking at the appropriations process that will be this fall. “The bill that comes at the end of the session is the extenders bill. That’s a possibility. I’m not gonna be too discouraged if we wait, because we have a year to go. But the sooner you can get it done, the better.”