Las Vegas Strip casinos, gamblers get bad news from Washington

While the house always wins in the long run, frequent gamblers have nights, even years, when they come out ahead. That, however, is not the norm, nor is it something any gambler should expect.

Most casino players lose money overall, but the IRS only automatically tracks big wins. If you win above a certain threshold, the casino reports it, and you must pay taxes.

Small wins aren’t tracked, but you’re technically still responsible, and under new rules, you can only deduct 90% of your losses, and most players end up losing.

• Very few casino players walk away ahead: Industry estimates suggest that only about 10 % of casino gamblers show a net win over the course of a year, meaning roughly 90 % lose money overall when playing at casinos, according to Las Vegas Advisor.
• Casinos have a built‑in financial advantage: On Las Vegas Strip slot machines, casinos typically keep around 8 % of all wagers, meaning players receive about 92 % back on average, a mathematical house edge that results in most players losing money over time, reported Casinos.com.
• Player loss is statistically expected: Because of the house edge baked into games, longer play typically favors the casino; even if some players win short‑term, the odds mean most gamblers will lose money overall, added Las Vegas Advisor.

When you do make a gambling profit in any given year, you owe taxes on any profits.

Under the previous rules, you could deduct any losses from your profits, so a good night in a losing year did not result in any payment owed. Now, however, under rules passed by the current Congress, you can only deduct 90% of your losses, meaning that even losing gamblers still owe taxes.

That's something the Nevada congressional delegation has failed to fix.

Congress won't change gambling tax rules

Efforts to restore the 100% deduction did not move forward in Congress during the week of Jan. 18, meaning that they are not likely to be considered during the current session.

"The House Rules Committee declined to advance an amendment to a larger spending bill that would restore a gambler’s ability to deduct 100% of losses on annual tax filings," the Las Vegas Review-Journal reported.

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These bipartisan efforts have been led by Nevada U.S. Representative Dina Titus, under the "FAIR BET Act" name.

“I led the charge to (restore the 100% deduction) with the FAIR BET Act I introduced last July after we discovered this tax on phantom winnings hidden in the OBBB,” Titus said. “I also have said from the very beginning that it doesn’t matter how this unfairness is rectified — it just needs to be fixed. It’s about righting a fundamental wrong that affects every person who gambles.”

How the new tax laws impact gamblers

Technically, casinos track players' wins and losses on slot machines, video poker, and table games. That data, however, is not provided to the IRS.

The IRS does get a Form W2-G when a player has won over certain levels.

• Slot machines and bingo: Casinos must issue a W‑2G and report winnings when a player wins $2,000 or more on slot machines or bingo (updated IRS reporting threshold for 2026).
• Poker tournaments: W‑2G must be filed when the net winnings from a poker tournament are more than $5,000 after subtracting the buy‑in or wager.
• Sports wagering and parimutuel pools: W‑2G is required when total winnings are at least 300 times the wager (e.g., winning at least 300 the stake) for horse racing, sports wagering, jai alai, and other parimutuel wagers.
  Source: IRS

You're supposed to report any casino wins to the IRS, but the reality is that most low-stakes gamblers do not because there's no record of their play. (In theory, if your friend pays you $20 to pick up his dry cleaning, that's also taxable income, but very few people would actually claim it).

Tax professionals say this gap between the rules and real-world behavior is common.

“While most people are aware that substantial winnings are taxable, they often forget that even smaller sports betting wins must be reported,” Paul Brahan, a financial advisor at Fort Pitt Capital Group told Financial Advisor.

Here's how the new rule works when filing taxes.

If a gambler wins $2,500 on slots but loses $1,000 in other plays, they may only deduct $900 of losses under the new rules, leaving $1,600 taxable.

Big winners have not been paying anyway

Big-ticket winners, however, who have had W2-G tax forms issued, have always been obligated to pay.

• 48,908 Americans with gambling winnings north of $15,000 didn’t file tax returns
• Between 2018 and 2020, there was about $13 billion in unreported gambling winnings
• With more than $13 billion unreported winnings, this resulted in about $1.4 billion in unpaid taxes.
  Source: Treasury Inspector General for Tax Administration

"This was discovered by the Treasury Inspector General for Tax Administration (TIGTA) in a Sept. 30 , 2024 report. It found that, between 2018 and 2020, 148,908 Americans with gambling winnings of more than $15,000 didn’t file tax returns," Casino.com reported. 

The IRS has no statistics on how much in taxes was lost by small-time winners who did not receive a tax form.

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What the new rules mean for gamblers

Under the previous rules, if you itemized your taxes, you could deduct your losses from any winnings. If that resulted in a net loss, no tax was owed.

The IRS does not just take your word on losses. It requires documentation.

U.S casinos will provide gamblers with a record of any play logged by playing under a loyalty card. There's no obligation to use a loyalty card, so some wins and losses below the tax form threshold are not recorded at all.

Under the next tax rules, only 90% of any wins can be deducted. That means even losing gamblers, like myself most years, will face a tax bill.

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