Lawmakers Renew Push to Restore Full Gambling Loss Deductions
Lawmakers are pushing to restore full tax deductions for gambling losses after a year-end change capped deductions at 90% of winnings.
LISTEN TO THIS ARTICLE:Members of Congress revived an effort this week to overturn a late-2025 tax provision that limits deductible gambling losses to 90% of winnings, raising fresh uncertainty for professional bettors, casinos, and regulatory bodies. The issue surfaced during a House Rules Committee discussion of HR 7148, an omnibus appropriations bill now serving as a likely vehicle for legislative corrections.
Representative Dina Titus (D-Nev.) reintroduced the FAIR BET Act as an amendment to HR 7148, proposing to restore the prior tax treatment that allowed losses to be deducted dollar-for-dollar against gains. The 90% cap was inserted into the tax code as part of a larger legislative package approved late last year and represents a sharp departure from decades of IRS practice.
Proponents of the change argued at the time that it would raise revenue and limit perceived abuse, but the new rule has drawn bipartisan criticism. Representatives Steven Horsford (D-Nev.) and Max Miller (R-Ohio) have jointly sponsored separate legislation with similar aims to repeal the cap, framing the move as a technical correction rather than a special-interest tax cut.
An industry coalition that includes major casino operators and sportsbook companies has been vocal in opposing the cap. In testimony before the committee, two trade groups warned that the limit could drive high-stakes players offshore or into unregulated markets and complicate bookkeeping for operators that report player winnings for tax withholding and compliance.
"This alteration does not reflect how wagering is actually conducted", said a senior industry tax adviser who reviewed the committee filings. "Professional players operate on very thin margins; taxing phantom gains undermines the integrity of reporting and creates perverse incentives to avoid licensed platforms."
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What the Change Means for Players and Operators
The practical effect of the cap is straightforward but consequential: a bettor who wins and loses the same amount over a tax year could still face federal tax liability on 10% of those matched losses, effectively paying tax on income they never retained. The change has particular bite for professional gamblers, who commonly report large turnover but net small or zero profits after staking and expenses.
Casinos and sportsbooks have argued that the policy places the gambling sector at a disadvantage compared with other high-risk activities, such as securities trading or commodities, where loss deductions are not similarly constrained. Operators also say the new requirement increases administrative burdens for internal accounting departments and for state regulators that coordinate tax reporting.
Legal and tax advisers warn that the change may spur behavioral shifts. Some smaller professional bettors could scale back or shift to unregulated offshore books to preserve economic viability, while larger operators could see reduced liquidity from the loss of high-rolling clientele.
David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, observed: "Any rule that taxes people on notional gains rather than realized income will distort choices in the market. It could push sophisticated bettors into gray markets and complicate enforcement for states that depend on transparent onshore wagering."
Titus’s strategy of attaching the FAIR BET amendment to a must-pass appropriations bill increases the proposal’s odds of success, but the measure still faces hurdles, with competing bills to reverse the gambling tax change also advancing in Congress. Appropriations negotiations are fluid during conference, and amendments can be stripped during markup or in the final House-Senate reconciliation.
With bipartisan support and strong industry lobbying, momentum has returned to a debate that will shape tax and regulatory outcomes across Nevada, New Jersey, Michigan, and other major U.S. gaming jurisdictions. Lawmakers and industry groups say a prompt fix is necessary to avoid disrupting the 2026 betting season and to provide clarity ahead of state tax filings in April.
Further Developments and Next Steps
Expect action in the coming weeks as House leaders finalize HR 7148 and as Senate counterparts weigh whether to accept any amendment language. Congressional staffers say hearings could resume if the amendment survives the Rules Committee, and industry groups are preparing additional briefings for state regulators and tax agencies. For professional gamblers and operators, the coming floor votes will determine whether the longstanding practice of full loss deductibility returns or if the 90% cap becomes the new baseline for reporting and tax liability.
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