Finance in gaming: Warsh confirmed, Clarity Act advances, UFC’s White urges Trump to revise gambling loss deduction rule

(AsiaGameHub) –   This week brought several significant financial developments relevant to the gaming industry. First, on Wednesday, Kevin Warsh was confirmed by the Senate as the new chairman of the US Federal Reserve. Warsh, who previously served as a Fed governor during the Great Recession, succeeded Jerome Powell, who had held the position for nine years as America’s top central banker.

Since the economic shock caused by the Covid pandemic pushed interest rates above 5%, the Fed has been hesitant to cut them. Inflation remains above the Fed’s 2% target, and energy prices have surged due to the US-Iran conflict, eliminating hopes for rate reductions this year. This has kept borrowing costs elevated and corporate valuations below normal levels.

Warsh is regarded as an economic conservative, opposing the Fed’s longstanding policy of “quantitative easing”—expanding its balance sheet through asset purchases. Although he supported quantitative easing upon his nomination in 2006 as a radical response to an impending crisis, he resigned in 2011 over concerns about excessive government spending. The Fed’s balance sheet stood at under $1 trillion in mid-2008; it now exceeds $6 trillion and peaked at $8.7 trillion in 2024.

While Warsh has emphasized the importance of Fed independence amid legal challenges against Powell, financial markets are anticipating interest rate cuts. If these occur, many gaming companies may benefit, especially since several major industry stocks remain well below their previous highs.

“Stocks move for two reasons, simplistically: estimate revisions, so numbers getting better, the consumer getting better, GDP growing, that’s one part. Then the second part is the valuation multiple, and as rates come down, that should result in higher multiples,” Macquarie head gaming analyst Chad Beynon told iGB in February.

Finance, gaming worlds watching Clarity Act

On Thursday, the Senate Banking Committee advanced the Clarity Act, a highly anticipated bill establishing a regulatory framework for cryptocurrency and digital assets. The legislation now moves to the full Senate, where it faces another round of debate. Time is critical—Republicans aim to pass the bill before November’s midterm elections, which could shift their congressional majority.

Although the Clarity Act does not directly regulate gambling, its passage would impact the sector. For instance, it would assign additional oversight responsibilities to the Commodity Futures Trading Commission (CFTC). As the regulator of prediction markets—a key rival of the gambling industry—this expansion could heighten concerns about increased federal scrutiny.

CFTC Chairman Michael Selig faces real staffing challenges, having faced intense questioning on the issue during a House Agricultural Committee hearing in mid-April. Despite lawmakers’ reservations, Selig remains confident, stating he is “utilizing new tools from AI to automation and other surveillance systems” to manage expanded duties.

For gamers, the potential passage of the Clarity Act could open the door to integrating cryptocurrency into regulated gambling platforms. Many operators report strong customer demand for crypto as a payment method, yet they are currently prohibited from offering it—unlike offshore sportsbooks and prediction market platforms such as Polymarket. FanDuel co-founder Nigel Eccles has shifted focus to crypto gambling and advocates for broader adoption.

“We’ve got a very clear signal from the federal government that [crypto] is a technology we should embrace,” Eccles told iGB last October. “We’ve got really clear operator interest. And so I do feel at a state level, a state regulator level, it is only a matter of time” before benefits outweigh risks.

Will UFC pressure help change deduction cap?

Finally, UFC President Dana White has urged US President Donald Trump to reverse the controversial tax change affecting gambling loss deductions. A passionate gambler himself, White reportedly holds a notorious reputation among Las Vegas casinos.

Previously, individuals could deduct 100% of their gambling losses from taxable income. However, the omnibus “One Big, Beautiful Bill” passed in July included a provision capping the deduction at 90%. As a result, many bettors now face unexpected tax liabilities even if they break even or incur net losses. For example, someone winning $100 per hand but losing $100 per hand might still owe taxes on any net gains under the new rule.

In a letter to Trump dated May 11, White argued that the law “makes it irrational to bet in the United States because you could end up owing taxes even when you lose or having a tax bill that exceeds your winnings for the year.” He also highlighted the UFC’s support for legalized gambling, warning that the change could drive more Americans toward unregulated offshore betting sites. The UFC plans to host UFC Freedom 250 on the White House lawn on June 16.

Several bills have been introduced over the past year to repeal the deduction cap, but little progress has occurred. Nevada Representative Dina Titus has been the most vocal opponent, immediately filing the FAIR BET Act after the original legislation passed. Though the bill has stalled, White’s appeal may help generate momentum.

“We should be encouraging players to properly report their winnings and wager using legal operators,” Titus said in a statement last year. “The Senate change will only push people to not report their winnings and to use unregulated platforms.”