Every gambler knows that the house always stacks the odds in their own favor; it's just this time it was the House of Representatives and not the casino.
Deep in the recesses of the One Big, Beautiful Bill was a tiny update to the tax code related to gambling.
In Sec 70114 (a), some clever politician slipped in this little doozy of a law change:
In general.--For purposes of losses from wagering transactions, the amount allowed as a deduction for any taxable year--
``(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and
``(B) shall be allowed only to the extent of the gains from such transactions during such taxable year.
Essentially that means that if someone wins $1,000,000 dollars at the casino, and then proceeds to lose all $1,000,000, they still owe taxes on $100,000 even though they have $0.
Another way to look at it is this: Earning $200,000 in "profit" from gambling would be treated as $700,000 in taxable income.
I'd wager a lot of bettors will be debtors next year.
A bipartisan group of Congress members who missed that little number in the 850-page omnibus (that most of them didn't read) are trying to get the law appealed.
The Nevada reps seem particularly annoyed (I wonder why?).
Representative Dina Titus, a Nevada Democrat and co-chair of the Congressional Gaming Caucus, introduced the Fair Accounting for Income Realized From Betting Earnings Taxation Act, or FAIR BET Act, which would restore the 100 percent deduction for gambling losses.
'It's taxing people on money that they don't have,' Titus told DealBook, 'and unfairly targeting one industry that should be treated like any other.'
The FAIR BET Act is the simplest piece of legislation I've ever seen, so I'll quote it in its entirety.
Section 165(d) of the Internal Revenue Code of 1986, as amended, is amended —
(1) by striking '90 percent' and inserting '100 percent'.
That's it!
I wonder if they'll manage to pass it, or if this will be the beginning of the end of gambling in our country.
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