Casino loyalty programs, long a fixture in Las Vegas, could soon face a major shake-up. A new federal tax change tucked into the recently signed One Big Beautiful Bill could make gamblers think twice before signing up — and that may spell trouble for casinos across the country.
Key Facts:
- The One Big Beautiful Bill was signed into law on July 4, 2025.
- Beginning January 1, 2026, gamblers will only be able to deduct 90% of their losses against their winnings for tax purposes.
- This change modifies Internal Revenue Code section 165(d), which currently allows a full deduction of losses up to winnings.
- Casino loyalty programs that track gambling activity could expose players to higher tax scrutiny.
- Federal watchdogs estimate up to $1.4 billion per year is lost due to unreported gambling income.
The Rest of The Story:
Casino loyalty programs are designed to reward players for frequent gambling by offering perks like free hotel stays, meals, and event tickets.
They also serve as valuable tools for casinos to keep high-spending guests coming back.
But starting in 2026, those perks may come with an unexpected cost.
Under the new tax rule, gamblers will no longer be able to fully deduct their losses against their winnings.
For example, if someone wins $250,000 but loses $265,000, they’ll only be able to deduct 90% of their losses — or $238,500 — and would still be taxed on $11,500 in winnings, despite an overall net loss.
The issue for casinos is that loyalty programs provide a paper trail of gambling activity, making it easier for the IRS to track and tax winnings.
“You’re supposed to report all gambling income anyway,” the article notes, but many don’t.
Between 2018 and 2020, 150,000 people with over $15,000 in winnings didn’t file, costing the IRS billions.
The new rules may discourage gamblers from using loyalty cards to avoid leaving a record.
Commentary:
From a tax policy standpoint, the government’s decision to curb full deductions on gambling losses seems sensible.
It’s a head-scratcher that players could lose money overall and still avoid paying taxes just by balancing out wins with losses.
For the average worker who enjoys the occasional trip to Vegas, this rule change closes a loophole that allowed entertainment to be subsidized by other taxpayers.
It’s not unreasonable to expect people to pay taxes on income, whether it comes from a job or a jackpot.
But the new rule could affect more than just the gamblers — it could ripple through the economy of casino destinations like Las Vegas, Reno, and Atlantic City.
Big-spending players are the lifeblood of the casino industry.
If tax exposure becomes a real concern, many may reduce their play or avoid using loyalty programs altogether.
That means less revenue for casinos and fewer perks for players, hurting tourism and related sectors like hospitality, entertainment, and retail.
Whether this change raises needed revenue or crushes casino momentum depends on how gamblers react.
The Bottom Line:
A small tax change in the One Big Beautiful Bill could have big consequences for the gambling industry.
By limiting the deductibility of gambling losses, the government may unintentionally undermine casino loyalty programs and deter high-volume players.
This could hurt the revenue of major gambling hubs just as much as it helps the IRS.
Gamblers and casinos alike will be watching closely.
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