At a field hearing discussing the One Big Beautiful Bill Act (OBBBA) in Las Vegas on Friday, the chair of the House Ways and Means Committee placed blame squarely on the Senate for the cut to how much gamblers can deduct on their taxes. He said the House is making a bipartisan effort to address the change.
The new 90% cap on gambling loss deductions, which could mean gamblers who break even or lose more than they win need to pay taxes on money they didn’t win, sparked criticism from various corners.
“For those of you concerned about this change, members on both sides of the aisle have heard you and many members on both sides of the aisle are working to address it before it goes into effect on Jan. 1,” said Rep. Jason Smith during his opening remarks.
In the lead-up to Friday’s hearing, Smith told Punchbowl News‘ Congress reporter Laura Weiss that he wants to reverse the change, calling it a “bad decision” that could “absolutely” be undone by the end of the year.
Reps believe they have readymade fix
Present at the hearing were Nevada Democrats Rep. Dina Titus and Rep. Steven Horsford, who are among several sponsors of the FAIR BET Act that Titus filed with the intention of reversing the change.
Calling the tax deduction change an “unjust penalty,” Horsford said he was glad to hear Smith suggest that members are working on a fix, but asked the chair to explicitly commit to working toward passing the FAIR BET Act.
“I’ve been crystal clear that we’ll look at what avenues we can to address the problem the Senate created,” replied Smith.
It’s worth noting that the House agreed to the Senate’s addition of the gambling deduction change by a recorded vote of 218-214. Smith voted in favor.
Titus certainly noted it.
“The Senate did put it in there, but it came back to the House,” she pointed out. “They wouldn’t accept any amendments and they all voted for it. So, let’s be sure we know who’s responsible, and let’s work together to try to fix it.”
FAIR BET sponsor Titus points to nationwide damage
Titus added that not only does her bill have bipartisan support in Congress, but parties including Nevada Resorts Association, the entire Nevada delegation, Nevada Gov. Joe Lombardo, Vegas media and numerous tribes all oppose the OBBBA change. Not to mention the one million people who have interacted on X, formerly Twitter.
“I’ve never gone viral before, but this issue has actually done that!” she remarked.
Titus noted the mass response shows that this “is not just a Nevada issue.”
“People gamble all over the country,” she stressed. “It’s not just your high-end professional poker players. Lots of people want to play the slots on the weekend or bet on a football game here or there, so it has an impact on them.”
She voiced concerns that it could encourage people not to pay their taxes.
“They’ll just figure, ‘to hell with it, I’m not going to turn this in,’ or they’ll go gamble offshore or in some black market,” she warned. “So, I think we definitely need to get rid of this. I’m glad Republicans have changed their mind from the time that they voted for it to now.”
Since the bill was signed by President Donald Trump, numerous Republican senators have spoken out to insist they either did not agree with the tax deduction measure or did not even know it had been added. At the time of writing, four Republicans are among 10 co-sponsors of Titus’ FAIR BET Act.
AGA labels deduction change “uniquely penalizing”
In the lead-up to the hearing, the AGA provided a letter it submitted to the committee to SBC Americas. While it supports certain OBBBA measures, including the change to the slot winnings reporting threshold, it criticized the deduction change.
“The result creates an unfair precedent by taxing phantom income and uniquely penalizing a legal, heavily regulated activity,” the AGA wrote to the committee. “We encourage timely action to restore fairness and consistency in the tax code for American consumers and look forward to working with you to revert to the House language.”
Even if the FAIR BET Act does gain support and momentum, it faces a race against time before the change takes effect on Jan. 1. Full Congress isn’t scheduled to meet until September, and the bill would need to get a formal vote in the committee and then pass through the full House and Senate.
