HomePublicationsNewsletter ArchiveNewslettersVolume 23Issue 41IMPACT OF THE NEW FEDERAL TAX CUTS AND JOBS ACT OF 2017 ON CASINO CUSTOMERS

Today, President Trump signed the “Tax Cuts and Jobs Act of 2017” (“Act”) into law.   The largest impact of the new Act will be on the limited group of people who are professional gamblers.  The Act will impact those who meet the IRS’s narrow definition of a “professional gambler” by capping their deductions for both wagering losses and expenses to the amount of their winnings. As an example, a professional gambler who has $30,000 in winnings can deduct up to that amount in combined losses and expenses such as travel, meals and hotel stays. Prior to these recent changes, professional gamblers were allowed to separately deduct expenses incurred in carrying out wagering without regard to their wagering wins and losses. This provision will expire after 2025 unless Congress extends it.

For nonprofessional gamblers, i.e. the average casino customer, the Act preserved as allowable an itemized deduction for gambling losses (up to the amount won), but also made significant changes to the standardized deduction that will likely lead to fewer casino customers itemizing their deductions on their tax returns.  Big picture, the Act lowered individual tax rates, while eliminating or reducing a number of deductions that were allowable in the past.  At one point, in the Senate, there was an effort to eliminate the deduction for gambling losses.   Thus, the preservation of the gambling loss deduction in the Act was a key victory for the casino industry.  However, there will be far fewer taxpayers who choose to itemize their deductions under the Act gives the increase in the amount of the standard deduction that may be claimed (now $12,000 for individual filers, $18,000 for heads of household and $24,000 for joint filers).


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