Should taxpayers subsidize wealthy people who like to gamble at casinos by allowing them to deduct their losses before paying taxes on their winnings? Republican Senator Dan Coats of Indiana doesn't think so. This past spring, he proposed an amendment to a major education bill that would eliminate the tax deduction, which the I.R.S. estimates would raise $3.8 billion in revenue over ten years, and use the money to offset tax breaks for private donations to scholarships for poor children.

Sounds like a no-brainer? Not for a Congress in which the process of writing legislation is run like an East Texas poker game, where the sharpest of the card sharks leans across the table and says, "Now play the cards fair, Reuben; I know what I dealt you."

The gambling industry has dealt a lot of cards to members of Congress in recent years. According to data compiled by the Center for Responsive Politics, the total in individual, PAC and soft money contributions from casino and tribal gaming interests has quintupled in the last three election cycles, from almost $1.2 million in 1991-92 to more than $6.7 million in 1995-96, with the money divided fairly evenly between Democrats and Republicans.

So far in the current cycle, the casino industry seems to be staking its bets more on the Republican majority, giving them almost $1.9 million to just under a million for Democrats. That number includes a well-timed gift of $250,000 in soft money from Mirage Resorts Inc. tycoon Steve Wynn to the kitty of the National Republican Senatorial Committee (NRSC), which rolled in just five days after Coats introduced his amendment.

The result: as reported by Congressional Quarterly Weekly, Senator Mitch McConnell, the chairman of the NRSC, warned Coats that he would fight his proposal if it came to the Senate floor. Majority Leader Trent Lott, whose leadership PAC has received $22,000 from gambling interests since 1995, worked behind the scenes, finding an alternative source of funding for Coats' scholarships. When Coats formally brought up his amendment, it made no mention of ending the handout to high rollers.

Thus, the gambling losses tax deduction survives. According to the I.R.S., this tax loophole has been a real boon for millionaires, 1,500 of whom deducted a whopping $377 million in gambling losses in 1995. At the same time, the House Appropriations committee has voted to eliminate home heating subsidies for 4.4 million Americans, two-thirds of whom make less than $8,000 a year. "I regret that we don't have more money to throw at problems," said the committee chair. "But it's the real world."

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