House Rules Panel Blocks FAIR BET Act as 2026 Gambling Tax Changes Loom
A House Rules Committee decision has stalled an effort to restore full federal deductions for gambling losses ahead of major tax changes taking effect in 2026.
LISTEN TO THIS ARTICLE:The House Rules Committee declined to advance an amendment that would have added the FAIR BET Act to the annual National Defense Authorization Act, effectively halting an expedited path to reverse recent limits on gambling-loss deductions. The move leaves the 2026 tax-year changes – most notably a cap that will limit deductible losses to 90% of reported gambling losses – intact for now.
Sponsored by Nevada Representative Dina Titus, the FAIR BET Act sought to restore the longstanding rule that gamblers may deduct losses up to the amount of their reported winnings, without a further statutory reduction. Advocates describe the FAIR BET measure as a correction to changes contained in last year’s broad tax legislation, often referenced in industry discussions as the One Big Beautiful Bill, which added the 90% deduction ceiling beginning in tax year 2026.
House leaders told members the amendment did not align with the core purpose of the Defense Authorization bill and warned the measure would reduce federal receipts ahead of larger budget negotiations. Committee members also raised procedural concerns about folding a tax-policy change into a must-pass national security vehicle.
Rep. Titus pushed the move as an emergency fix for recreational and professional bettors, who she warned could be taxed on phantom income. “This provision will unfairly force hardworking people to pay taxes on money they never actually kept”, she said in a statement. “Restoring the full deduction protects consumers and supports transparency in our regulated gaming markets.”
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Practical Steps for Bettors and Industry
Industry groups, including casino operators and online wagering platforms, have lobbied aggressively against the deduction cap, arguing it complicates tax reporting and may incentivize players to use offshore, unregulated sites. The American Gaming Association and several state casino associations warned Congress that the 90% cap could hamper compliance and push some activity outside regulated markets.
On the other side, fiscal conservatives and some Republican lawmakers have resisted expanding deductions as Congress heads into higher-stakes budget talks. Senate Finance Committee leaders have shown little appetite to reopen the issue; a separate proposal from Senator Catherine Cortez Masto seeking to roll back the reduction has not been scheduled for a hearing.
Tax professionals are urging bettors to prepare now. Amanda Reid, a Las Vegas-based CPA who advises high-volume recreational bettors and gaming operators, said parties should tighten recordkeeping and revisit withholding strategies. “Anyone who gambles regularly should preserve detailed win/loss records, receipts and any account statements”, Reid said. “With the 90% cap coming into force, a player who breaks even on tracked activity could still have a taxable amount; planning now can reduce surprises when the 2026 filings are due.”
Operators and accountants should also review customer reporting thresholds and user communication. Compliance teams at online sportsbooks and land-based casinos will need to update tax forms and customer guidance; some platforms are already preparing FAQs and enhanced account statements to help users capture losses and wins accurately.
With no consensus in either chamber, the FAIR BET Act’s future depends on shifting legislative priorities and broader budget negotiations. Rep. Titus indicated she will continue seeking relief during future tax markup sessions, while lobbyists for gaming interests say they will press both the House and Senate this year.
For now, bettors and operators face a clearer calendar: the 90% deduction rule remains scheduled to apply to returns for tax year 2026 unless Congress acts. That timetable gives industry stakeholders and taxpayers roughly a year to adapt reporting practices and to press lawmakers during the 2025 legislative cycle.
Quick Takeaway for Players and Operators
Maintain meticulous records, consult tax counsel ahead of 2026 filings, and monitor congressional activity. If lawmakers revisit the cap, changes are most likely during broader budget or tax-reform negotiations rather than through must-pass defense legislation.
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