The OBBB’s Impact on the Gaming Industry

The One Big Beautiful Bill (OBBB) contains impactful tax legislation affecting the gaming industry. Here's what you need to know.

Gambling Loss Limitations

Traditionally, losses from so-called “wagering transactions” could offset wagering gain. Wagering income would be reported by taxpayers as taxable income (as part of Adjusted Gross Income), and losses could be claimed as an itemized deduction.

Starting in 2026, the OBBB provides wagering transaction deductions that are only allowed up to an amount equal to 90% of the losses. This could result in a taxpayer owing tax on wagering income even if that taxpayer has an equal amount of wagering losses.

One industry concern is that this additional tax could deter taxpayers from certain gambling activities if tax is owed on winnings without a full offset for losses. There are Congressional proposals that could change this result, in whole or in part, before this new law becomes effective in 2026.

No Tax on Tips and Overtime

One hallmark of the OBBB is the so-called “no tax on tips” and “no tax on overtime” provisions, effective beginning January 1, 2025, through December 21, 2028.

Taxpayers in an industry customarily receiving tips can claim a deduction (up to $25,000) for tips reporting on a Form W-2, subject to taxable income phaseouts. Similarly, qualified overtime compensation, paid based upon an hourly rate, can also be deducted by taxpayers (up to $25,000), subject to taxable income phaseouts.

Importantly, employers must still report overtime and tip income on Form W-2, and subject the income to withholding, and we anticipate the introduction of new information reporting requirements to help with this reporting. Gaming establishments will need to continue tracking tips and overtime income and work with their payroll provider to properly report the eligible income

Employer Provided Meals

Many gaming establishments provide meals for employees on the establishment’s premises, and expenses relating to these meals were deductible, in part (a 50% deduction). Now, under the OBBB, for the 2026 tax year forward, no deduction is allowed for the operation of an employee operating eating facility, with limited exceptions.

For the 2026 tax year forward, no deduction is allowed for the operation of an employee operating eating facility, with limited exceptions. Functionally, this may result in gaming establishments owing additional tax (through the loss of deductions) for costs relating to employee cafeterias.

The impacts of the OBBB are wide sweeping. Our experienced tax and gaming industry teams can help.