Clock Working Against House Lawmakers Seeking to Repeal 90% Cap on Gambling Loss Deductions
LAS VEGAS – With just three months left in 2026, time is running out on efforts to repeal a policy Congress approved last year that could cost American gamblers more than a billion dollars over the next decade, starting with tax filings next spring.
Without new legislation, taxpayers who report gambling winnings as income on their returns will only be able to deduct wagering losses equal to 90% of the winnings they report. In previous years, gamblers could deduct losses at up to 100% of their winnings.
For example, under a 90% cap, if a bettor has $10,000 in winnings and $12,000 in losses, they can deduct only $9,000 in losses. That means they would still owe taxes on $1,000 in winnings, even though they did not come out ahead. In previous years, they could have deducted $10,000 to offset their tax liability.
Lawmakers in both the U.S. House and Senate have filed bills to rectify that, and two weeks ago the FULL HOUSE Act, a version sponsored by U.S. Reps. Max Miller (R-Ohio) and Steven Horsford (D-Nev.), was added by the House Ways and Means Committee as part of an amendment to the Digital Asset Tax Certainty Act. That 38-5 vote moves the measure to the House floor for that chamber’s consideration.
However, the House is not expected to return to Washington until the week following next month’s midterm elections. That means supporters of the measure would have less than two months to get the House to pass it and then get it through the Senate before the two-year session ends.
“I’m working hard to ensure that it’s a high priority and that we’re pushing for action,” Horsford told Odds On News after he spoke at the Global Gaming Expo in Las Vegas earlier this week. “The Ways and Means Committee vote was overwhelming. It was bipartisan. People understood the issue, and we had worked with our leadership to make sure that Democrats were on board.”
Gambling, of course, is the key driver to Nevada’s economy. Horsford’s district includes The Stratosphere on the Strip and several Downtown Vegas properties, such as Circa, The D and Golden Nugget.
Senate Presents Challenge
U.S. Rep. Andy Barr (R-Ky.) offered his own version of the deduction cap repeal, called the WAGER Act. Barr’s district covers Lexington and the surrounding counties, many of which are home to large thoroughbred farms that raise horses for racing.
In an interview with Odds On News last month, Barr said he was happy to see a version of the repeal move forward in the House. The congressman said he has also taken up the matter with current Senate Majority Leader John Thune (R-S.D.).
Barr is not running for re-election. Instead, he is seeking to replace U.S. Sen. Mitch McConnell, Kentucky’s seven-term Republican senator.
“There’s some concern that there are some members of the Senate Finance Committee who don’t agree with (restoring the full deduction), and so I weighed in with the Senate Majority Leader why this matters to Kentucky,” Barr said.
It was in the Senate Finance Committee where the deduction cut was included last year, much to the surprise of gambling industry stakeholders and their legislative supporters, as lawmakers worked to pass the One Big Beautiful Bill Act under President Trump’s requested July 4, 2025, deadline. Senators negotiating changes in the package that extended tax cuts passed in 2017 and eliminated income taxes on some workers’ overtime and tips compensation needed to find ways to raise additional money to offset other changes.
According to the Joint Committee on Taxation, cutting the loss deduction to 90% is expected to generate about $1.1 billion in federal revenue over 10 years. That funding stream may be created, at least to some extent, by bettors who end up paying taxes on income they did not actually receive.
“I explained to the leader that what this does is it inadvertently creates phantom income, and it penalizes participation in the sport,” Barr added.
Odds On Analysis
As much as the gambling industry and bettors want to see this resolved before the end of the year (technically, Jan. 3, 2027), getting it done is far from a sure thing.
First, it seems like Congress may be more interested in passing legislation around college sports. As of Friday night, Kalshi traders gave the Protect College Sports Act a 48% chance to become law this year.
However, Congress also has a continuing appropriations bill it must pass by Dec. 11 to keep the government going.
Could that be an avenue to repeal the 90% cap on gambling losses?
“We’re going to pursue any and every option,” Horsford told Odds On News.
Next month’s elections may also factor into how lawmakers proceed, as one Democratic insider told me. Republicans currently control both the House and the Senate, but all signs point to the Democrats taking back the House at the very least.
Republican leaders may face more pressure to oppose the FULL HOUSE Act, or any other measure to restore the full deduction, in the lame-duck session if Democrats take control of both the House and the Senate as a result of the Nov. 3 elections.
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