Mayo: professional gamblers may deduct business expenses beyond winnings (U.S. Tax Court): Status, Rulings and What It Means for Players

What this case is about

Mayo v. Commissioner of Internal Revenue, Tax Court No. 15527-03 (136 T.C. 81), is a U.S. Tax Court decision of January 25, 2011 on the tax treatment of a professional horse-race bettor. Ronald and Leslie Mayo petitioned in 2003 over tax year 2001, and the Commissioner of Internal Revenue was the respondent.

The question was whether section 165(d), which limits wagering losses to wagering gains, also caps a professional gambler's ordinary business expenses under section 162. The case is one of the Gambling Tax Litigation decisions that define what players can deduct.

Who is covered

This is an individual tax case, not a class action. The parties are the Mayos and the Commissioner. The opinion was a court-reviewed opinion by Judge Gale, with Judge Halpern concurring.

The ruling concerned professional gamblers, meaning those whose wagering is a trade or business. More U.S. cases are listed under Gambling Lawsuits in United States. This page is not tax advice.

Is there a payout?

No payout exists in this case. It is a tax dispute about deductions, and no fund, settlement or claim process is involved.

The Mayos' figures for tax year 2001 are in the table below. Nothing in the record gives players a claim, and filing a settlement claim is free wherever one exists.

What the court decided

The Tax Court held that wagering losses stay capped at wagering gains, even for professionals. It also held that non-wagering business expenses, such as handicapping data, travel and subscriptions, are deductible under section 162 without the section 165(d) cap, overruling Offutt. The IRS acquiesced in AOD 2011-06.

Congress later reversed this part for 2018 through 2025 in the Tax Cuts and Jobs Act. The 2025 reconciliation act (OBBBA) limits deductible losses to 90 percent of losses from 2026. As of November 14, 2026 no lawsuit against the 90 percent cap was found in our records.

Why it matters

Mayo was the leading authority separating wagering losses from business expenses for professional gamblers. As of November 14, 2026 the 2011 decision stands as a judgment. Its rule has been overridden by statute for part of the period since 2018, so a reader must check which tax year applies.

For references on how tax authorities treat gambling payments, see Are Gambling Settlement Payments Taxable.

Questions people ask

Can professional gamblers deduct expenses beyond winnings?

Under Mayo, yes for non-wagering business expenses under section 162. Congress reversed that part for 2018 through 2025 in the Tax Cuts and Jobs Act.

Were wagering losses limited in Mayo?

Yes. The Tax Court held that wagering losses stay capped at wagering gains, even for a professional gambler.

Is there a lawsuit against the 90 percent loss cap?

None was found as of November 14, 2026. The cap comes from the 2025 reconciliation act and applies to losses from 2026.