In a significant development this week, the House Ways and Means Committee voted 38-5 in favor of a measure aimed at restoring the full 100% gambling loss tax deduction. This comes after a long effort to reverse the limit imposed by President Trump’s One Big Beautiful Bill Act (OBBBA), which reduced the deduction to 90% when it was enacted in July 2026.
The 90% cap has faced considerable backlash from gaming industry professionals, gamblers, and some federal legislators, who viewed it as a tax on unearned income. Under the previous rules, if a gambler had $100,000 in wins and the same amount in losses, they could fully deduct the losses, resulting in no taxable income. Under the new limit, they would be taxed on $10,000 of those losses.
Multiple federal bills have been introduced to reverse this change. Recently, language to restore the full deduction was attached to the Digital Asset Tax Certainty Act. The Ways and Means Committee advanced this bill on Wednesday, September 16, although it will still require approval from both chambers of Congress to become law. However, as reported by CNN, the full House is unlikely to reconvene until after the upcoming midterm elections, potentially delaying the process.
The push to overturn the deduction change has been led notably by two Democratic representatives from Nevada, Dina Titus and Steven Horsford. Titus wasted no time after the enactment of the OBBBA last year, filing the Fair Accounting for Income Realized from Betting Earnings Taxation Act (FAIR BET Act) the day after Trump signed the bill. Horsford, who co-signed the FAIR BET Act, introduced another initiative, the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act (FULL HOUSE Act), in January 2026, with the same goal.
After the committee's vote, Titus expressed the urgent need for the House to pass the measure before January 1, 2027. She stated, “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.” She also noted her frustration about the prolonged timeline for action.
Horsford echoed this sentiment, emphasizing that restoring the full deduction would provide financial relief to taxpayers and safeguard jobs dependent on gaming and tourism in Nevada. “I won’t stop until we get this relief signed into law,” he remarked, insisting that no one should be taxed on money they have not earned.
Support for this legislative effort includes the American Gaming Association (AGA) and various casino and online gaming operators. AGA President and CEO Bill Miller stated, “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.” Wynn Resorts CEO Craig Billings further underscored the importance of the bill, calling the committee's approval a crucial step toward fairness in the tax system and protection of the workforce.
