A year-long effort to reverse the change to the federal gambling loss tax deduction finally took a step forward in Congress this week.
The House Ways and Means Committee (WAM) voted 38-5 to pass a measure that would restore the 100% gambling loss tax deduction. Those deductions were capped at 90% by President Trump’s One Big Beautiful Bill Act (OBBBA) that was approved in July 2025 and enacted in July 2026.
That change was widely criticized by gaming industry leaders, professional gamblers and federal lawmakers that essentially taxed. gamblers on unearned money. Under the new rules, if a gambler broke even in a fiscal year with $100,000 in winnings and the same amount in losses, they would have to pay tax on $10,000 of those losses, as they could only deduct $90,000. Previously, that gambler would have been able to deduct the full $100,000 in losses.
Several federal bills sought to repeal the change, and language to do so was attached to the Digital Asset Tax Certainty Act this week, which the WAM advanced on Wednesday, Sept. 16.
The proposal would need to pass a full vote in both chambers before it could potentially become law. However, there is likely to be a significant delay before it could progress further, as CNN reported that the House is unlikely to return to session until after the November midterm elections.
Nevada reps hail progress on removing ‘phantom tax’
The effort to undo the change was led most prominently by two Democratic members of Congress from Nevada, Reps. Dina Titus and Steven Horsford.
The next working day after Trump signed the One Big Beautiful Bill Act in July 2025, Titus filed the Fair Accounting for Income Realized from Betting Earnings Taxation Act (FAIR BET Act) to undo the gambling loss deduction change. Horsford, a co-signer of the FAIR BET Act, subsequently sponsored the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act (FULL HOUSE Act), a bipartisan bill filed in January 2026 seeking the same outcome.
Titus and Horsford both posted public comments on Wednesday after the approval.
“After 14 months of fighting to get this commonsense, bipartisan fix through committee, we must now encourage the House to approve this measure before Jan. 1, 2027,” wrote Titus in a press release. “This would stop the reduction to 90 percent from taking effect and ensure gamblers across the nation do not pay this tax on phantom money they never won.”
Committee Chair Rep. Jason Smith said at a field hearing in Las Vegas 14 months ago that he was committed to undoing the gambling loss tax deduction’s reduction to 90%. Titus wrote that she is disappointed that it took so long for the committee to take action.
“Nothing happened until now, when the House will be out of session until after the election,” bemoaned Titus. “The Republican House leadership must bring this provision to the floor, and the Senate must also expeditiously pass it if we are to prevent the tax from taking effect and harming gamblers nationwide.”
Horsford said in a statement that restoring the 100% gambling loss tax deduction threshold would provide relief for taxpayers and help protect Nevada jobs that depend on gaming and tourism.
“I won’t stop until we get this relief signed into law,” Horsford added. “No one should pay taxes on money they never earned.”
Gaming industry hopes Congress moves quickly
Various gaming industry organizations support the efforts to restore the gambling loss tax deduction to 100%, including the American Gaming Association (AGA), major casino resort companies, and online gaming operators.
“The American Gaming Association is grateful for this critical step forward in restoring the 100% gambling tax deduction,” said AGA President and CEO Bill Miller in a statement provided to SBC Americas. “We encourage Congress to pass the FULL HOUSE Act to ensure that consumers choose the legal market where protections exist and are not taxed on phantom income … We look forward to working with our partners in Congress to get this passed.”
Wynn Resorts CEO Craig Billings added in a statement that the bill’s progression out of committee marks “a critically important step toward protecting our workforce and restoring fairness to the tax code.”
