Red tape indicators: sports betting, R&D and click-to-cancel

Summary

Podcast Summary: The Indicator from Planet Money

Episode: Red Tape Indicators: Sports Betting, R&D and Click-to-Cancel
Release Date: July 11, 2025
Hosts: Adrienne Ma & Waylon Wong
Producer: Cooper Katz McKim
Engineered by: Jimmy Keighley
Fact-Checked by: Sierra Juarez
Editor: Kagan Cannon

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Introduction

In this episode of The Indicator from Planet Money, hosts Adrienne Ma and Waylon Wong delve into three significant regulatory changes impacting the economy: the reduction of tax deductions for gambling losses, modifications to research and development (R&D) tax incentives, and the tumultuous journey of the "click to cancel" rule. Through engaging discussions and insightful analysis, the hosts unpack how these changes affect various stakeholders, from professional gamblers to tech companies and consumers.

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1. The Impact of Reduced Gambling Loss Deductions

Timestamp: [02:55] - [05:11]

Key Points:

• Tax Deduction Adjustment: The Tax Cuts and Jobs Act, signed by President Trump, reduced the deductible percentage of gambling losses from 100% to 90%.

• Professional Gamblers Affected: Professional gamblers can no longer offset all their losses against their winnings. For example, with $100,000 in winnings and $100,000 in losses, taxpayers would now only deduct $90,000, resulting in a taxable income of $10,000 instead of zero.

• Industry Reaction: This change has stirred significant concern within the gambling community. A professional poker player remarked on social media, "You can't be a professional gambler in the US if this goes through" ([04:45]).

• Legislative Response: A Democratic congresswoman from Nevada has introduced a bill to restore the 100% deduction, arguing that the reduction may push gamblers towards unregulated platforms or discourage reporting of winnings.

Notable Quote:

"You're being taxed on money that you didn't take home." — Adrienne Ma ([04:25])

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2. Changes to Section 174: R&D Tax Deductions

Timestamp: [05:15] - [07:50]

Key Points:

• Historical Context: Section 174 of the U.S. tax code allowed companies to fully deduct their R&D expenses in the year they were incurred, incentivizing innovation and development.

• Tax Cuts and Jobs Act Modification: Beginning in 2022, companies are required to amortize R&D costs over several years instead of deducting them immediately. This change effectively reduces the immediate financial benefit of investing in R&D.

• Impact on Industries: Sectors like technology have expressed significant concerns, linking the reduced deductions to recent layoffs and decreased investment in R&D.

• Restoration Efforts: As part of the latest bipartisan tax and spending bill, there is a move to revert Section 174 back to allowing full, immediate deductions. This restoration aims to reignite investment in R&D and support business growth.

Notable Quote:

"The tax code giveth and the tax code taketh away." — Waylon Wong ([07:38])

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3. The Rise and Fall of the Click-to-Cancel Rule

Timestamp: [07:55] - [10:50]

Key Points:

• Purpose of the Rule: The Federal Trade Commission (FTC) introduced the "click to cancel" regulation to simplify the process for consumers to cancel subscription services, mirroring the ease of signing up.

• Legal Setback: A federal court struck down the rule not on its merits but due to procedural missteps by the FTC. Specifically, the FTC failed to publish the required preliminary report for public comment, instead only releasing the final analysis ([08:43]).

• Implications for Consumers and Businesses: The dismissal of the rule delays protections intended to prevent consumers from being trapped in unwanted subscriptions, while businesses avoid the need to streamline their cancellation processes.

• Future Prospects: The FTC may attempt to reintroduce the regulation, this time adhering strictly to procedural requirements to ensure its legitimacy and enforceability.

Notable Quote:

"This whole saga shows just how difficult it is sometimes for government agencies to make changes to regulations." — Jeff Guo ([09:49])

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Conclusion

Adrienne Ma and Waylon Wong effectively highlight how legislative and regulatory changes ripple through various sectors of the economy. From the nuanced challenges faced by professional gamblers and the technological industry's R&D investments to consumer rights in subscription services, the episode underscores the intricate balance between regulation and economic vitality. The hosts provide a clear understanding of these issues, making complex topics accessible and relevant to everyday listeners.

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Notable Quotes with Timestamps:

• "You can't be a professional gambler in the US if this goes through." — Professional Poker Player ([04:45])
• "The tax code giveth and the tax code taketh away." — Waylon Wong ([07:38])
• "This whole saga shows just how difficult it is sometimes for government agencies to make changes to regulations." — Jeff Guo ([09:49])

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Credits:

• Produced by: Cooper Katz McKim
• Engineered by: Jimmy Keighley
• Fact-Checked by: Sierra Juarez
• Editor: Kagan Cannon
• Production: Indicators of Production, NPR

Transcript

[Jeff Guo]

Npr.

[Adrienne Ma]

This is the Indicator from Planet Money. I'm Adrienne Ma.

[Waylon Wong]

And I'm Waylon Wong. Joining us today is.

[Adrienne Ma]

Waylon. What is that sound?

[Waylon Wong]

I don't know. It sounds like something or someone crashing through the underbrush. Is that just Jeff Guo of Planet Money?

[Jeff Guo]

Guys, it's not me. I'm pretty sure it's the tempestuous beast known as Indicators of the Week.

[Cooper Katz McKim]

Oh, phew.

[Waylon Wong]

Sorry for the case of mistaken identity, Jeff.

[Jeff Guo]

Don't worry about it. Happens all the time. On this episode of Indicators of the Week, we are taking on one of the most unstoppable forces in the economy. It's got a huge footprint. I'm talking about the government, the apex.

[Waylon Wong]

Predator of the economy for some people perhaps. So today we'll be digging into why professional gamblers are worried about extinction, why businesses might start investing more in research and development like cloning dinosaurs, and why it may stay difficult to cancel your subscriptions. Hold onto your butts after the break.

[Jimmy Keighley]

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[Cooper Katz McKim]

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[Waylon Wong]

Today, My indicator is 90%. This refers to the percentage of gambling losses that people are able to deduct.

[Jeff Guo]

Yeah. This is news you can use. There is a tax deduction for the money you lose when you're gambling.

[Waylon Wong]

Yes. And you used to be able to deduct 100% of your losses against what you gained.

[Jeff Guo]

So.

[Adrienne Ma]

So essentially, Uncle Sam, aka the taxpayers, have been supplementing their risk with 100% deduction.

[Waylon Wong]

Right. But that deduction got lowered to 90% under the big tax and spending bill that President Trump just signed. And this change in the tax code is causing quite a stir in the gambling world, especially among professionals.

[Adrienne Ma]

I am not an experienced gambler myself, but I guess I don't really understand what the big deal is here.

[Waylon Wong]

Yes. But here's a hypothetical that kind of lays out what people are getting upset about. Okay, so let's say you won $100,000 in a year, and that same year you also lost $100,000.

[Jeff Guo]

Right. So you netted zero.

[Waylon Wong]

Exactly. Under the old tax code, you could deduct all of your losses, $100,000, so you would net out at zero taxable gambling income. Now, with this change in the law, you can only deduct 90% of your losses. So that's $90,000. Deduct those $90,000 from your winnings of 100k, and that leaves you with $10,000. You will now be taxed on those $10,000.

[Adrienne Ma]

Okay, but that's even though I didn't make any money gambling for the year.

[Waylon Wong]

Yeah. So gamblers say it's like you're being taxed on money that you didn't take home. You can see why this is making waves in that community. One professional poker player said on social media that, quote, you can't be a professional gambler in the US if this goes through.

[Jeff Guo]

And I imagine this is affecting a lot of people. Right. Because gambling and sports betting have become such big things in the US over the past couple years.

[Waylon Wong]

Yeah. There is definitely pushback. And one Democratic congresswoman from Nevada has already introduced a bill that will restore the old deduction of 100%. She said if the lower deduction stays in place, gain gamblers will end up using unregulated platforms or they'll just stop reporting their winnings.

[Adrienne Ma]

Thank you very much. But first, I just got to go call my bookie.

[Waylon Wong]

You're like, I have a crisis.

[Adrienne Ma]

Actually, my indicator is also tax related. It is 174, as in section 174 of the US tax code.

[Jeff Guo]

Ooh, throwing those sights at us.

[Adrienne Ma]

See what I did there? Bending the indicator of the week. Rules a little bit. But this has to do with the one big, beautiful bill act President Trump signed into law on July 4th. And as we parse out the different facets of this bill, one relatively obscure one that caught my eye this week that I'd argue is actually pretty important, has to do with section 174 of the tax code. So this is a tax law that goes back decades, and what it does is allow companies to fully deduct research and development costs they incur in a given year. So, hypothetically, if you are a company that makes cat toys, let's say I'm looking at you, Jeff.

[Jeff Guo]

Ooh. Yeah.

[Adrienne Ma]

And let's say you spend 1,000 bucks developing these cat toys. You know, you make prototypes. You pay wranglers to bring in all the cats to test them.

[Waylon Wong]

You convene the focus groups of cats. Mm.

[Jeff Guo]

You pay the cats, of course, and.

[Adrienne Ma]

You rack up 1000 bucks in research expenses. You could deduct that thousand bucks from your taxable income that year. But this law was changed during the first Trump administration when Republicans passed the Tax Cuts and Jobs Act. Basically, when they were trying to get it through, they were figuring out how can they pay for the bill. And they said starting in 2022, companies could no longer immediately deduct all their R and D expenditures in a given year.

[Waylon Wong]

I'm sure they were not thrilled with that.

[Adrienne Ma]

And instead, they would have to amortize or spread them out over several years. And so that means that a company that used to deduct a hundred percent of their research costs upfront each year could now only deduct like, 20% of it.

[Jeff Guo]

And this was, like, a huge deal, Right? Like, it made the cost of research and development for companies just a lot more than it used to be.

[Adrienne Ma]

Yes. A lot of people in sectors like the tech industry kind of freaked out about it. And some have suggested that is one of the reasons the tech industry has laid off so many people in the past couple of years. So what you have is, like, a pretty negative impact on some businesses, which is probably why Republicans this time around, with the big, beautiful bill, decided to restore the rule that allowed full deductions.

[Waylon Wong]

So it went from, like, 20% each year back to 100%?

[Adrienne Ma]

Yes.

[Waylon Wong]

The tax code giveth and the tax code taketh away. That was the lesson of my indicator. It's also the lesson of your indicator, Adrian.

[Adrienne Ma]

That is correct. Um, Jeff, what's your indicator of the week?

[Jeff Guo]

All right, so my indicator of the week has to do with something else having to do with the government that we've talked about on the show. It's called the click to cancel rule. It was this new regulation from the Federal Trade Commission that was supposed to make it easier to cancel your subscription services.

[Waylon Wong]

I remember this. Yep.

[Jeff Guo]

Right.

[Waylon Wong]

So if you were able just to sign up for something really easily by, like, clicking something on their website, they wanted to make it just as easy to cancel that thing. Like, you don't have to call someone on the phone or whatever.

[Jeff Guo]

So this was a pretty big deal. And this new regulation, it was supposed to take effect next Monday. However, just this week, a federal court struck down the rule. So as of now, click to cancel is no more. It's gone.

[Waylon Wong]

Oh, we were so close.

[Adrienne Ma]

Just like that.

[Jeff Guo]

Yeah.

[Adrienne Ma]

So what was the rationale?

[Jeff Guo]

Yeah. Okay. So the funny thing is the court didn't have a problem with the regulation itself. The court had a problem with how. How the FTC created the regulation.

[Waylon Wong]

Oh, so that's like a procedural thing.

[Jeff Guo]

Yeah. They didn't follow the right rules to make this rule.

[Waylon Wong]

Oh, no.

[Jeff Guo]

So I know. So when government agencies make new regulations. Right. There's usually this whole choreography. You have to publish a draft of the regulation, you have to collect public feedback, sometimes you hold public hearings. And for this regulation specifically, one of the rules was that the FTC was supposed to publish a report looking at the costs and benefits of the rule and analyzing possible alternatives. In fact, they were supposed to publish two versions of that report. A preliminary analysis for the public to digest and comment on, and then a final analysis. But in this case, the problem is that the FTC only published the final report, not the draft.

[Waylon Wong]

Oh, my gosh. This is so, like, arcane.

[Jeff Guo]

Yeah. Right.

[Waylon Wong]

So they were working on this for literally years.

[Jeff Guo]

Yeah.

[Waylon Wong]

And then it all just went away. Because they didn't file a preliminary report.

[Jeff Guo]

Yes, exactly. I think that this whole saga, what it shows you is just how difficult it is sometimes for government agencies to make changes to regulations. There are just a lot of hoops they have to jump through. And, you know, that is intentional. Those rules are there to make sure that the public gets a say in what government agencies do.

[Waylon Wong]

I mean, that does make sense, right? Like having public comment and the opportunity to, like, digest information and see.

[Jeff Guo]

Yeah.

[Adrienne Ma]

Although it might be more efficient if they had, like, a click to make a rule rule.

[Jeff Guo]

No. That takes us down the road to tyranny, Adrian. But anyway, the ftc, they can bring back the click to cancel rule. They just have to follow all the rules this time.

[Waylon Wong]

Well, sounds like click to cancel is going the way of the dinosaurs.

[Jeff Guo]

Well, they could always bring it back.

[Waylon Wong]

Actually, just like in the Jurassic park series. You just keep bringing the dinosaurs back.

[Jeff Guo]

Just make sure you follow the rules.

[Waylon Wong]

This they always do in the movies, right? Everything always goes so great.

[Adrienne Ma]

This episode was produced by Cooper Katz McKim and engineered by Jimmy Keighley. It was fact checked by Sierra Juarez. Kagan Cannon is our editor and the indicators of production of NPR.

[Cooper Katz McKim]

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