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Congress finally took the first step in the year-long effort to reverse President Trump’s change to the federal gambling loss tax deduction. The One Big Beautiful Bill Act (OBBBA), which was approved in July 2025 and enacted a year later in July 2026, capped the federal gambling loss tax deduction at 90% down from 100%.
Congress now seeks to reverse the change, instituting a 100% deduction again. To this end, the House Ways and Means Committee (WAM) voted 38-5 to pass a measure that would reverse the change, restoring the 100% gambling loss tax deduction. On September 16, the WAM advanced the Digital Asset Tax Certainty Act, which contains language to repeal the change.
Taxing gamblers on unearned money
The 90% cap on loss tax deductions means that players who break even have to pay taxes on unearned money. If a player wins $100,000 and loses the same amount, they would still have to pay tax on $10,000, as the 90% cap allows them to deduct only $90,000 of the losses. Previously, the gambler would have deducted the full $100,000, not needing to pay taxes.
To this end, federal lawmakers, industry leaders, and professional gamblers widely criticized the new cap as being unfair. Most notably, Reps. Dina Titus and Steven Horsford, Democratic members of Congress from Nevada, led efforts to undo the changes.
One day after President Trump signed OBBBA, the two lawmakers filed the Fair Accounting for Income Realized from Betting Earnings Taxation Act (FAIR BET Act). Moreover, Rep. Horsford also sponsored the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act (FULL HOUSE Act), a bipartisan bill with the same objective as the FAIR BET Act.
“After 14 months of fighting to get this commonsense, bipartisan fix through committee, we must now encourage the House to approve this measure before Jan. 1, 2027. This would stop the reduction to 90 percent from taking effect and ensure gamblers across the nation do not pay this tax on phantom money they never won,” wrote Rep. Titus in a press release following the committee’s approval.
Titus continued, “Nothing happened until now, when the House will be out of session until after the election,” bemoaned Titus. “The Republican House leadership must bring this provision to the floor, and the Senate must also expeditiously pass it if we are to prevent the tax from taking effect and harming gamblers nationwide.”
Rep. Horsford also commented, saying, “My FULL HOUSE Act just passed in committee. It will restore the gambling loss deduction to the same standard set for decades. I will keep working until this gets passed into law. No one deserves to pay taxes on income they never earned.” He noted that reversing the change would provide relief for taxpayers and help protect jobs that rely mostly on gaming and tourism in Nevada.
Notably, Committee Chair Rep. Jason Smith also expressed his commitment to reversing the change to the gambling loss tax deduction at a field hearing in Las Vegas 14 months ago. While the committee has finally made the first move, Rep. Titus still expressed her disappointment that it took so long.
Time is of the essence
While Rep. Titus is disappointed by the time it took to start the process to repeal the change to the gambling loss tax deduction, it may take longer to see the effort through. The proposal must pass a full House vote before both chambers before potentially becoming law. However, this could take quite some time, as the House may not return to session until after the November midterm elections.
Besides the lawmakers, various organizations in the gaming industry also support the move to restore the 100% deduction. Vocal parties include the American Gaming Association (AGA), major casino resort companies, and online casinos in the US.
AGA President and CEO Bill Miller said, “The American Gaming Association is grateful for this critical step forward in restoring the 100% gambling tax deduction. We encourage Congress to pass the FULL HOUSE Act to ensure that consumers choose the legal market where protections exist and are not taxed on phantom income … We look forward to working with our partners in Congress to get this passed.”
