A second federal lawmaker in the space of four days has filed a bill looking to undo the change made by the One Big Beautiful Bill Act (OBBBA) to limit how much gamblers can deduct on their taxes. While the bill is still active, an attempt to fast track the legislation failed on the Senate floor on Thursday.
On Thursday, Nevada Sen. Catherine Cortez Masto introduced the Facilitating Unbiased Loss Limitations to Help Our Unique Service Economy (FULL HOUSE) Act. The measure would reinstate the rules that gamblers can deduct all of their losses if they won more than they lost, stating that “losses from wagering transactions shall be allowed only to the extent of the gains from such transactions.”
The Senate version of the OBBBA signed by President Donald Trump controversially changed the rule to restrict gamblers so that they can only deduct 90% of their losses in any given tax year. Previously, 100% of losses were tax-deductible if gamblers lost more than they won in a single tax year.
Cortez Mastro presented S 2230 and appealed for it to be passed via unanimous consent, a streamlining process wherein a proposed measure can be approved without a vote as long as no senator objects.
But that’s not how things worked out on the Senate floor.
Sponsor calls tax change ‘ridiculous’
While fiscal estimates suggest the gambling provision in the OBBBA could raise $1.1 billion over eight years for the federal government, it has led to concerns not only that a gambler could owe taxes even if they lose more than they win in a year, but also that it may push them towards the illegal market.
Cortez Masto referenced both of those worries on Thursday when introducing the bill. “This ridiculous gaming tax is something we can fix today,” she urged her fellow senators.
“That’s largely because this provision being included in that tax bill was a result of Republicans haphazardly inventing new budget rules to ram their debt-busting bill through Congress. These new rules they made up forced them to make changes to existing policy, even if it made that policy worse for Americans, and that’s what happened here.”
However, Sen. Todd Young, a Republican from Indiana, spoke up to object to fast-tracking the bill. He noted that the OBBBA also included other provisions that need fixing. In particular, he said he would only support Cortez Mastro’s bill being put in the express lane if she added an amendment to restore a scratched endowment tax exemption for certain religious institutions.
Cortez Masto said no, and her bill will now have to go through the full procedural process in Congress. It will now head to the Senate Finance Committee.
“I have to say it is a shame that we cannot pass this common-sense fix because Republicans want to weigh it down with unrelated measures that they voted to support,” she lamented.
‘Common sense’ a commonality between repeal bills
The FULL HOUSE sponsor added that she believes restoring the 100% deduction is a “common-sense fix.”
That exact same language was also used by her Nevada counterpart in the House of Representatives, Rep. Dina Titus, whose FAIR BET Act seeks to do in effect the same thing as Cortez Masto’s FULL HOUSE Act.
Titus’ bill, co-sponsored by California Democratic Rep. Ro Khanna and introduced on Monday, would scratch “90 percent” in the OBBBA text and replace it with “100 percent.”
Shortly after Thursday’s discussion of the FULL HOUSE Act in the Senate, Titus wrote on social media that she found the failure to reach unanimous consent “not surprising.”
“The Senate got us into this mess and it’s now time for both chambers to unite behind my bipartisan FAIR BET Act to ensure that average and high-stakes gamblers do not pay taxes on money they never won,” Titus added. “… We will all be losers if the FAIR BET Act is not passed by Congress and signed by the President.”
Lawmakers flew blind on OBBBA change
“Nobody thinks this is a good idea,” added Cortez Masto on Thursday. “And I’m not sure many of my Republican colleagues even knew this was in the bill that they passed.”
It seems she’s not wrong.
“If you’re asking me how it got in there, no, I don’t know,” Iowa Sen. Chuck Grassley (R) told HuffPost this week. “I don’t know anything about it. I’m not sure what it does,” added Texas Sen. John Cornyn (R). Both of those senators sit on the Finance Committee, which was responsible for crafting the OBBBA’s tax-related elements.
North Carolina Sen. Thom Tillis (R) told HuffPost the provision is “bad policy” and that it was another reason, alongside Medicaid health insurance cuts, to oppose the bill.
