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The IRS held an open hearing on July 17, 2026 on the new 90% gambling loss deduction rule, a tax change set to take effect for the 2026 tax year that critics say could leave some gamblers owing tax even when they do not finish the year ahead.
Speakers at the hearing included Rep. Dina Titus, tax professionals including Gary Kondler, gaming industry representatives, and both amateur and professional gamblers. The central complaint was that capping deductible gambling losses at 90% of winnings could create taxable “phantom income” for players whose annual results are not actually profitable after losses are fully counted.
Kondler & Associates said the rule could also reduce gambling participation and add administrative burdens. Gary Kondler said, “The gambling industry is looking to face a decline in numbers because of the fear set in for many gamblers because of the 90% rule.”
Why the rule is drawing opposition
The hearing focused on whether the gambling tax provision should stand as written or whether the IRS should provide clarifying guidance. Multiple speakers urged a return to allowing gambling losses to offset winnings at 100%, effectively repealing the new limitation.
Rep. Titus argued the issue reaches beyond individual tax filers because of the size of the U.S. gaming sector. She said, “The domestic gaming industry supports 1.8 million jobs, $104 billion in wages and salary, and $53 billion in tax revenue for state and local government.”
Kondler & Associates also argued that the rule conflicts with federal regulatory principles favoring predictability and economic efficiency, citing Executive Order 13563 and Executive Order 12866.
What comes next
One alternative discussed at the hearing was the session method, which can affect how gambling wins and losses are tracked and reported. But state-level guidance remains limited, and IRS resistance to that approach is still possible.
Kondler & Associates said it also raised questions about how the IRS defines a “session.” The firm stated, “We also highlighted the structure of the session method and raised questions regarding the definition of the term ‘session.’”
Several questions remain unresolved, including whether the IRS will revise or clarify the 90% rule, how any final guidance will treat session-based accounting, and whether the underlying provision could still be amended or repealed. For now, the key confirmed timeline is that the rule is slated to apply in 2026 unless policymakers or regulators change course.
