An advocacy group established by former Vice President Mike Pence supports the tax rules for gambling in the Senate version of the One Big Beautiful Bill Act (OBBBA).
Advancing American Freedom Foundation, a conservative advocacy and policy group, is taking a stance supporting the forthcoming change to how deductions for gambling losses are allocated. The Senate version of the OBBBA proposes mandating that only 90% of a gambler’s total wagering losses in a taxable year should be allowed as a deduction.
For example, if a poker player or bettor won $10,000 and lost the exact same amount in one tax year, they would be taxed as if they won $1,000 even if they broke even at $0.
Advancing American Freedom believes gambling losses should not be deductible at all. The non-profit organization focuses on developing policy solutions and delivering messaging to support conservative values. Its leadership includes former Chief of Staff for Sen. Ted Cruz and Executive Vice President Paul Teller and board member Ed Feulner, who co-founded conservative think tank The Heritage Foundation.
Gamblers in the U.S. have been allowed to deduct 100% of losses from gambling if the losses don’t surpass their winnings for a given tax year. Currently, the IRS considers gambling winnings taxable income with winnings over $5,000 subject to a flat 24% tax rate. The gambling tax provision included in the OBBBA is set to go into effect in 2026.
“Americans have the freedom to gamble on sports, but why should American taxpayers foot the tax bill for sports gambling?,” said Advancing American Freedom in a memo sent to Congressional offices. “Nearly all gamblers lose money, leading to further financial, health, and family problems. Congress should encourage a pro-growth tax code by declining to reinstate full expensing for gambling losses.”
The group believes the tax rules laid out in OBBBA could curtail gambling by Americans due to the potential for gamblers to be taxed on more than their net winnings. Advancing American Freedom believes previous U.S. tax codes adopted before the introduction of OBBBA encouraged gambling by Americans by offering full expensing for losses.
“Legalized sports gambling ultimately makes life more difficult for many Americans while funding the growth of government,” read the memo.
Pence does not want to reinstate full expensing for gambling after taking a stance against gambling in 2006 by supporting the Internet Gambling Prohibition and Enforcement Act. The former vice president opposed online betting before the overturning of the Professional and Amateur Sports Protection Act (PASPA) in 2008 due to gambling being an “addiction that destroys families across America.”
In addition to Advancing American Freedom, the tax provisions in the OBBBA have also garnered support from the American Gaming Association (AGA) as the act’s tax policies “support consumers, encourage business innovation and investment, and strengthen U.S. competitiveness,” according to a social media post shared by the AGA.
Pence acknowledges revenue generated by gambling
Advancing American Freedom does note the additional revenue generated by sports betting for state and local governments with roughly $10 billion in taxes collected since the overturning of PASPA.
State and local governments across America have generated additional revenue from sports wagering but the OBBBA could also create economic opportunity.
According to projections from the Joint Committee on Taxation, the OBBBA is estimated to generate more than $1 billion in additional revenue from gamblers over an eight-year period. The estimate equates to approximately $137.5 million in revenue per year.
Advancing American Freedom also points out recent state-sanctioned tax changes.
The group notes the additional $36 million in revenue the State of Illinois is projected to generate once the state implements a 25-cent or 50-cent per-wager tax on operators starting on Sept. 1. Operators in Illinois will be charged 25 cents per wager accepted in the state with that figure increasing to 50 cents after the first 200 million bets in a year.
Sportsbooks in Illinois are responding to the per-wager tax by implementing transaction fees for customers. Both FanDuel and DraftKings will levy a 50-cent transaction fee on all online wagers. Fanatics is also planning to implement its own transaction fee of 25 cents.
Hard Rock Bet and BetMGM will require bettors to wager $2 or more amid the new tax.
Lawmakers oppose tax provision in the OBBBA
Advancing American Freedom is supporting OBBBA’s tax provision on gambling as lawmakers are taking legislative steps to overturn the tax cap on gambling losses.
Nevada Congresswoman Dina Titus introduced the Fair Accounting for Income Realized from Betting Earnings Taxation Act (FAIR BET Act) as a measure that restores the 100% loss deduction for gambling. Titus introduced the measure before President Donald Trump signed the OBBBA. It has been referred to the House Committee on Ways and Means.
Fellow Nevada lawmaker Sen. Catherine Cortez Masto also wants to repeal the OBBBA while Kentucky Rep. Andy Barr also introduced a piece of legislation that reverses the tax provisions in the OBBBA. The measure, the Winnings and Gains Expense Restoration (WAGER) Act, also restores the ability for gamblers to deduct 100% of their losses.
The bill was also referred to the House Committee on Ways and Means.
The OBBBA’s tax provision is also causing leadership at marquee gaming companies to voice their opinions. Last month, MGM Resorts International CEO Bill Hornbuckle said that he and other executives at land-based casinos are meeting with politicians to reverse the tax deduction rules for gambling. Hornbuckle believes that the rule isn’t a “fair deal.”
