Full Gambling Tax Deduction Restoration Pushed by Supporters

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Full Gambling Tax Deduction Restoration Pushed by Supporters

As Congress deals with the effects of the government shutdown, legislators and gaming industry leaders are renewing their push for tax reform. They aim to restore the 100% gambling tax loss deduction, which the One Big Beautiful Bill (OBBB) reduced to 90%.

The change, included in the broad tax reform, has drawn pushback from professional gamblers, online sportsbooks, and online casinos alike.

Full Gambling Tax Deduction: Why Stakeholders Are Pushing to Restore It

Under prior law, gamblers who itemize deductions could offset their winnings with equivalent losses, effectively taxing only net gains. The OBBB’s 90% cap alters that concept: beginning in tax year 2026, gambling losses will be deductible only up to 90% of total losses (still limited to winnings) rather than the full amount. 

Industry advocates warn this can create “phantom income” – situations where a gambler breaks even or even incurs a net loss but still faces tax liabilities. Casinos fear diminished liquidity and lower spending as high-volume clients pull back from regulated venues or real money online casino platforms. 

The American Gaming Association and other gaming groups argue the cap undermines the competitive edge of domestic regulated gambling. 

Moreover, the recent government shutdown further complicated legislative momentum. All committee work and bill markups were paused, delaying any corrective action before the effective date. 

Congressional leaders now face a narrow window to reverse the deduction cut before it goes live. 

Implementation Deadline & Legislative Status

The OBBB’s 90% deduction limitation takes effect for tax years beginning after December 31, 2025. Effectively, starting January 1, 2026, if no developments arise to counter its implementation. 

To counter this, Representative Dina Titus (D-NV) introduced the FAIR BET Act, proposing full restoration of the 100% deduction. Her bill has gained bipartisan support, but as of now it remains stalled, having not yet advanced out of the House Ways and Means Committee. 

Opponents of the 90% cap argue it unfairly penalizes legal gamblers while doing little to curb illicit wagering. Many lawmakers, both Republican and Democratic, have voiced that the reduction lacks fairness and is poorly targeted. 

Some propose attaching the restoration to other must-pass tax or appropriations bills to force its passage. 

With less than three months before the new rule takes effect, the legislative fight is urgent. Gaming leaders, professional gamblers, and casino executives continue lobbying hard to reverse the cap before Jan. 1, 2026. 

The consensus in Washington is shifting: many lawmakers now view the 90% rule as an unjust burden on regulated gambling. More importantly, they consider restoring the full gambling tax deduction both economically and politically sound.